The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council will be held in Brussels on 21 February 2012. The Chancellor will attend. The following items are on the agenda to be discussed (as of 20 February 2012):
Proposals from the Commission on Economic Governance
ECOFIN will aim to agree a general approach on the Commission’s two proposals to strengthen economic governance: the first to strengthen surveillance of budgetary policies in euro area member states; and the second to strengthen economic and fiscal surveillance of euro area countries facing, or threatened with, serious financial instability.
This follows on from an exchange of views at the 24 January ECOFIN which demonstrated broad support for the proposals. Two main issues remained unresolved: first, whether all euro area member states should submit their budgetary plans to the Commission and the euro group for monitoring purposes or only euro area member states in excessive deficit should do so; and secondly, whether the Council should be empowered to adopt a recommendation that a member state should seek financial assistance.
The UK supports the measures as they are designed to improve stability in the euro area. These proposals apply only to the euro area. However, the proposals should maintain a role for the Council and Economic and Financial Committee where appropriate
Presentation and First Exchange of Views on Macroeconomic Balances: Alert Mechanism Report
The Commission will present its Alert Mechanism report, the first stage in the new EU-level excessive imbalances procedure, and the Council will have a first exchange of views, with an intention of returning to a substantial discussion and possible adoption of Council conclusions at the ECOFIN meeting on the 13 March. The Government support the excessive imbalances procedure as a means of strengthening European economic governance, particularly in the euro area.
Following the publication of the Alert Mechanism report on 14 February, the Commission will now conduct in-depth reviews on 12 member states to examine whether they have an excessive imbalance. The 12 includes France, Sweden, Denmark and Finland as well as the UK. (The four countries receiving IMF assistance—Greece, Romania, Ireland and Portugal—are automatically excluded from this process). At the end of May the Commission will publish whether any of these imbalances are deemed excessive. Member states with excessive imbalances are obliged to submit corrective action plans; for euro area countries, submission of an inadequate corrective action plan or failure to comply with the plan will lead to escalating sanctions up to and including a fine of 0.1% of GDP.
The UK has already taken significant action to rebalance the economy, including at the Budget and at the autumn statement.
Contribution to the European Council meeting on 1-2 March 2012: European Semester (including Euro-Plus Pact)
ECOFIN will agree a set of Council conclusions on the Commission’s annual growth survey (AGS). The Government consider that the conclusions send a balanced message about the need for reforms at member state and EU-level, and that they broadly support the policy messages contained in the AGS. The Government look forward to an in-depth discussion of structural reform and concrete commitments on growth at the March European Council.
Preparation of G20 Meeting of Finance Ministers and Governors (Mexico, 25-26 February 2012)
Ministers will agree EU terms of reference for the G20 Finance Ministers’ and Governors’ meeting. This will be the first G20 Finance Ministers’ and Governors’ meeting of the Mexican presidency. The draft terms of reference focus on: the global economy and G20 framework; IMF resources, governance and surveillance; financial regulation/inclusion; and energy and commodities. The global economy and IMF resources are likely to dominate the discussion. The EU negotiating position for the G20 is broadly in line with UK objectives.
Council Recommendation for the Discharge in Respect of the Implementation of the Budget for 2010
As part of the annual discharge process, Ministers will conclude recommendations to the European Parliament on whether to discharge the Commission from its responsibility for implementing the 2010 EU budget, based on an annual report from the European Court of Auditors (ECA). Progress in reducing the error rate has halted and, for the 17th successive year, the ECA is unable to grant an unqualified positive opinion on the EU accounts. Therefore, the UK will stress the importance of year-on-year improvements to reach an unqualified audit opinion from the ECA and press for concrete actions by both the Commission and member states to improve EU financial management. The UK will issue a joint statement with other member states calling for tougher action in future years.
Budget guidelines for 2013
As part of the annual EU budget process. Ministers will discuss guidelines to the Commission on preparing the draft EU budget for 2013. Given the ongoing pressure on public resources, budget discipline at the EU-level remains crucial to support domestic efforts to tackle deficit and debt. Following the freezing of the 2012 EU budget in real terms, the UK will emphasise the need for strict and rigorous prioritisation in 2013 in order to curb budgetary growth, reduce waste and deliver a better-targeted EU budget next year. The UK will support the guidelines.
AOB
The presidency will provide a debrief from the trialogue on the European Markets Infrastructure Regulation (EMIR). At the trialogue meeting of 9 February the presidency reached an agreement with the European Parliament. Political negotiations are therefore concluded. The UK welcomes the agreement that has been reached on EMIR. This regulation will benefit the whole of the EU and is an important step on the path towards meeting our G20 commitments.
Also under the AOB agenda item France and Germany will present their Green Paper on corporate tax convergence.
ECOFIN Breakfast
Prior to the formal ECOFIN meeting Ministers, the president of the euro group will debrief Ministers on the euro group meeting of 20 February. Ministers will also exchange views on the economic situation. There will also be a debrief on the state of play with regards the banking package.