The Chancellor of the Exchequer (Mr George Osborne)
The informal Economic and Financial Affairs Council (ECOFIN) was held in Copenhagen on 30-31 March 2012. Ministers discussed the following items:
Co-operation between the euro area and EU as a whole
During the working lunch, Ministers discussed how euro area member states and EU-27 could improve co-operation with each other.
De-brief from Eurogroup and economic outlook
The chair of the Economic and Financial Committee (EFC), de-briefed Ministers on issues discussed at the Eurogroup including agreement on the euro area firewall. I intervened to make it clear that the UK would want to take a decision on IMF resources alongside other G20 members. The presidency then invited EU institutions to give presentations: Andrea Enria, Chairman of the European Banking Authority, updated Ministers on the bank recapitalisation exercise; and Ollie Rehn, Commissioner for Economic and Monetary Affairs, gave a summary of the economic outlook. The presidency summarised the discussion, noting that the financial markets were calmer and the economic outlook was better, but that member states would need to continue with fiscal consolidation and growth-enhancing reforms.
Multi-annual financial framework (MFF)
The Commission presented their proposal for the next MFF, for the years 2014-2020. I rejected the Commission’s proposal. A large increase in the MFF could not be justified to Parliament and the British public at a time of fiscal consolidation. I also made it clear that the abatement was not for discussion and that the UK did not support any new EU taxes to fund the EU budget. The presidency summarised by noting that a number of member states had insisted that the MFF proposal must be lower and would set out this position in a letter to the chair of the General Affairs Council.
Financial Transaction Tax (FTT)
During a restricted session before dinner, the presidency asked Ministers for a political steer on the FTT proposal. I intervened to say that the UK did not support the Commission proposal for an EU FTT, as it would drive business to other financial centres outside the EU. The UK believes that the financial sector should make a fair contribution and that this is currently achieved in the UK through our bank levy. The presidency concluded that work would continue to proceed on the Commission proposal, but noted that several member states expressed dissatisfaction with the proposal and agreed that consideration should also be given to alternatives.
EU crisis management framework
The presidency introduced the work on an EU crisis management framework and invited several institutions to present, including: Yves Mersch, co-Chair of the Financial Stability Board regional group for Europe; Christian Clausen, President of the European Banking Federation and President and Group CEO of Nordea Bank; and Klaas Knot, President of the Dutch Central Bank. Commissioner Barnier, outlined the work that the Commission had undertaken so far, and was hopeful that further dialogue devoted to the “bail-in” tool would be completed within the next four weeks. The UK intervened to welcome the imminent publication of the EU crisis management framework. The UK also raised its scepticism of resolution funds and stated that the first line of defence for financial institutions in times of financial stress should be higher capital requirements, and the second should be a crisis management framework with “bail-in” tools. The presidency concluded by noting the complexity of the issues and the need for proposals to be tabled soon.
Credit rating agencies directive and regulation (CRA3)
The presidency asked Ministers for political guidance on two outstanding issues on CRA3: rotation (whether there should be a limit on the period of time that an issuer can engage a particular credit rating agency) and the endorsement regime (whether the regime for allowing the use of third-country ratings in the EU, initially set out CRA1 and CRA2 and updated in CRA3, should be reopened). The Commission suggested that rotation would enhance competition between CRAs, and that the endorsement regime was already agreed upon in CRA1 and 2 and therefore should not be reopened. Alongside other member states, the UK intervened to disagree with the rotation proposal and to note that the third-country equivalence regime had caused unnecessary disruption in the past. The presidency noted the concerns that had been raised on rotation and on third-country ratings, and that the rules would not be reopened, but they would look carefully at how the rules were interpreted in practice.
Preparation for IMF spring meeting and G20 Finance Ministers meeting. 19-21 April 2012
The presidency gave a brief summary of the issues for discussion and outline of the upcoming meetings in Washington.
Any Other Business: extraordinary ECOFIN
The presidency anticipated that there would be an extraordinary ECOFIN early in May, to discuss the capital requirements directive 4.