ECOFIN

George Osborne Excerpts

Monday 23rd January 2012 Written Statements

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

The Economic and Financial Affairs Council will be held in Brussels on 24 January 2012. The Chancellor will attend. The following items are on the agenda to be discussed (as of 20 January 2012):

European Markets Infrastructure Regulation (EMIR)

Ministers will have an exchange of views on the outstanding issues on EMIR. Trialogues have been ongoing since ECOFIN reached general agreement on 4 October. The outstanding issues relate to the process for authorisation of central counterparties (CCPs), and provisions relating to third countries. The Danish presidency is seeking a solution that retains the key principles of the Council position while integrating a number of the European Parliament’s concerns.

On the authorisation of CCPs, the Government believe that the National Competent Authority must have a pre-eminent role. Therefore, any agreement should maintain the principles established at the 4 October ECOFIN. On third country provisions, the objective should be the smooth functioning of the global derivatives market while providing ex ante legal certainty to market participants. It is important that jurisdictions recognise the global nature of the derivatives market and ensure that legislation enables the smooth functioning of this market in a safe manner.

Proposals from the Commission on Economic Governance

ECOFIN will hold a first exchange of views on two Commission proposals to strengthen economic governance. There are no direct policy implications for the UK as these proposals apply to the euro area only. The first proposal concerns strengthening surveillance of budgetary policies. It would require: euro area member states to present their draft budgets at the same time each year and give the Commission the right to assess them; closer monitoring and reporting requirements for euro area countries in excessive deficit procedure; and that euro area member states have in place independent fiscal councils and base their budgets on independent forecasts.

The second proposal concerns strengthening economic and fiscal surveillance of euro area countries facing, or threatened with, serious financial instability. It aims to ensure that the surveillance of member states under a financial assistance programme, or facing a serious threat of financial instability, is: robust, follows clear procedures and is embedded in EU law. Under the proposal, the Commission would be able to decide whether a member state experiencing severe financial instability should be subject to enhanced surveillance. The Council would be able to issue a recommendation to such member states to request financial assistance.

The UK welcomes these proposals, as they will play an important role in improving fiscal stability in the euro area, which is a good outcome for the UK. The Government are however keen to ensure that, despite applying only to the euro area, these proposals maintain the role of the Council and EFC.

Presentation of the Presidency work programme

The presidency will present Ministers with its work programme. It has four priorities:

A responsible Europe—making progress on financial regulation dossiers and multi-annual financial framework (MFF) negotiations;

A dynamic Europe—revitalising the single market and encouraging policies which stimulate EU growth;

A green Europe—advancing energy efficiency and climate change initiatives; and

A safe Europe—including combating terrorism and ensuring the EU speaks with one voice on international affairs.

The Government agree that making progress on financial regulation dossiers is important, and will want to see budgetary restraint in the MFF negotiations. The Government support efforts to stimulate EU growth and strengthen the single market.

European Semester (incl. Annual Growth Survey and Euro-Plus Pact)

Ministers will have an exchange of views on the second European semester. The Government believe that the European semester should identify and prioritise policy measures that promote jobs and growth. To achieve this, ECOFIN Ministers need to ensure that fiscal consolidation and tackling macro-economic imbalances is pursued alongside growth-enhancing structural reforms. The Government do not agree with the focus on taxation in the annual growth survey; it is important that member states retain the flexibility to shape their own tax policies to suit their economic circumstances.

Follow-up to the G20 Meeting of Finance Deputies (Mexico, 19-20 January 2012)

The presidency will give a debrief of the G20 Finance Deputies’ meeting. Items include: the global economy and framework; strengthening of the international financial architecture; financial regulation including financial inclusion; and energy and commodities. This agenda item will provide further clarity on the direction that Mexico would like to take.

Implementation of Stability and Growth Pact

Ministers will discuss the Commission’s assessments of Belgium, Cyprus, Malta, Poland and Hungary’s progress on correcting their excessive deficits. The Commission has assessed that the first four member states have taken effective action and no further steps under the Excessive Deficit Procedure (EDP) are necessary. For Hungary, the Commission proposes to move to the next stage of EDP and recommends that the Council decides that no effective action has been taken to bring the deficit below 3% of GDP in a sustainable manner. Subject to this decision, the Commission may then propose new recommendations, with a view to Hungary effectively addressing its excessive deficit. The Government believe that sound public finances are essential for sustainable economic growth.

Revised Code of Conduct of the Stability and Growth Pact

The presidency will ask Ministers to endorse a revised code of conduct. The code of conduct provides guidelines on: the implementation of the stability and growth pact and the content of stability and convergence programmes. The code of conduct has been updated in the light of the new economic governance legislation. The Government support the revised code of conduct.

Eurogroup-plus meeting on 23 January

Ministers will meet on 23 January, prior to ECOFIN. They will discuss the intergovernmental agreement and follow up to the December European Council. Ministers will also discuss the European stability mechanism. On growth and competitiveness, the Government are at the forefront of driving the EU growth agenda, and will continue to press for action. On the intergovernmental agreement, the Government will be engaging constructively in discussions. The UK will not be party to the new treaty.