ECOFIN

Wednesday 23rd May 2012 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

The Economic and Financial Affairs Council was held in Brussels on 15 May 2012. Ministers discussed the following items:

Revised Capital Requirements Rules (CRD IV)

The presidency presented a proposal for a general approach on the CRD IV directive and regulation, which was followed by a ministerial discussion. Following substantial changes made to the proposal during negotiations at the 2nd May ECOFIN and a critical revision in the run up to this ECOFIN, I was able to join the rest of the Council in agreeing the presidency proposal. These changes will ensure that: the Government will be able to implement the recommendations of the Vickers review in full; that Europe as a whole will be able to implement Basel III; and that the Government will have the necessary freedom to carry out our macro-prudential policy objectives.

The presidency will now start negotiations with the European Parliament, on the basis of the Council’s general approach. The aim is to reach agreement on the texts at first reading, if possible by June, as requested by the European Council in March.

Negotiating Mandate for Savings Taxation Agreements with third countries

The presidency introduced a recommendation for a Council decision to adopt the mandate for the Commission to negotiate amended savings agreements with five third countries. During the discussion Luxembourg and Austria were unable to agree to the proposed mandate and the presidency concluded that it would not be possible to adopt the mandate at this meeting.

2012 Ageing Report

The presidency introduced proposed Council conclusions on the sustainability of public finances in the light of the 2012 Ageing Report. After a brief ministerial discussion the 2012 Ageing Report was endorsed and the conclusions were adopted by the Council.

Fast Start Climate Finance

The presidency introduced proposed Council conclusions to endorse the fast start finance report. The Commission highlighted that, despite the difficult economic situation and tight budgetary constraints, the EU was on track to meet its commitments and Ministers adopted the conclusions.

Draft General Budget for 2013

The Council took note of a presentation by the Commission of its draft for the EU’s general budget for 2013 and held an exchange of views on the proposal. The UK intervened to make clear that the Commission’s proposed 6.8% increase was not realistic in the current climate, with member states making great efforts to reduce deficits at home, and that the EU should focus on improving the quality, rather than increasing the volume, of expenditure, reducing over-budgeting and finding greater efficiencies. Our intervention was supported by a number of other member states. The Council will now look to establish its position on the draft budget by the end of July.

ECOFIN Breakfast

Ministers were updated over breakfast on the European Commission’s spring forecasts. Ministers were also debriefed on the euro group meeting of 14 May which discussed the economic situation in Spain and their three pronged strategy being implemented to: tackle regional fiscal deficits, implement structural reforms and reform the banking sector. The Greek delegation had also briefed euro area member states on the political situation in Greece.

Ministers also discussed the forthcoming election of a new president for the EBRD and were updated on the process that would be followed for the election on 18 May.

Finally Ministers were updated by the EFC president on the progress being made in reducing European seats on the IMF Board by two, as agreed at the Seoul G20 summit in 2010.

European Investment Bank (EIB) Board of Governors Meeting

The EIB board of governors met prior to ECOFIN. In discussion, the president of the EIB noted that calls for growth orientated policies were becoming more frequent but, for the bank to increase its lending activity, it would have to increase its capital. It was also important to ensure the bank maintained its AAA rating. I intervened to stress the importance of maintaining the AAA rating and that this was critical to the organisation’s effectiveness. However I was willing to consider the arguments for supporting growth. I also stressed that any increase in lending should have a better geographical balance throughout the EU.

Ministerial Dialogue with Candidate Countries

Ministers, over lunch, held an informal meeting with their counterparts from the EU accession and candidate countries—Croatia, Turkey, the Former Yugoslav Republic of Macedonia, Montenegro, Iceland and Serbia—focusing on the candidate countries’ pre-accession economic programmes for the 2012-14 period.