ECOFIN 21 February 2012

George Osborne Excerpts

Monday 5th March 2012 Written Statements

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

The Economic and Financial Affairs Council was held in Brussels on 21 February 2012. Ministers discussed the following items:

Proposals from the Commission on Economic Governance

Ministers agreed a general approach on the economic governance “two pack”. The legislation will allow the Commission increased oversight into the budgets of eurozone member states and also sets up a surveillance procedure for eurozone members subject to a macro-economic adjustment programme. The Government have been clear that the proposals should maintain a role for the Council where appropriate and the Eurogroup has agreed to inform the Council as a whole when a request for loan assistance has been made. The presidency will now commence the trialogue process with the European Parliament.

Presentation and First Exchange of Views on Macro-economic Imbalances—Alert Mechanism Report

The presidency introduced the Alert Mechanism Report as the first step in the new macro-economic imbalances procedure. The Commission clarified that the role of the report is to be a screening device to identify member states that might potentially be at risk of having, or developing imbalances. This item will be discussed in greater depth at the March meeting of the Economic and Financial Affairs Council.

Contribution to the European Council Meeting on 1-2 March 2012: European Semester (including EuroPlus pact)

Ministers agreed the conclusions on the European semester for the European Council. The presidency observed that these conclusions will end the first phase of the semester process and will provide important guidance to member states. The Government look forward to an in-depth discussion of structural reform and concrete commitments on growth at the European Council.

Preparation of G20 Meeting of Finance Ministers and Governors (Mexico, 25-26 February 2012)

Ministers endorsed the EU terms of reference. The Commission spoke of the need to increase IMF resources, and the importance of making a case for this at the G20.

Council Recommendation for the Discharge in Respect of the Implementation of the Budget for 2010

The presidency introduced this agenda item by acknowledging that there was an increase in the error rate and that efforts to improve financial management needed to be stepped up. It reiterated the Council’s previous call for the error rate to reduce year on year. While the majority of Ministers agreed to a text recommending the discharge of the budget, the UK joined with Sweden and the Netherlands to vote against the recommendations. The UK voted against the discharge because of the slippage on progress made in recent years. Along with the Netherlands and Sweden, the UK issued a joint statement calling for tougher action in future years.

Budget Guidelines for 2013

The presidency introduced the proposed budget guidelines for 2013. During the discussion, the UK and others intervened to make clear that, in the current economic circumstances, there was a clear case for a constrained budget in 2013, as in 2012. Some other member states, while respecting the need for budget consolidation, argued that this should not compromise EU programmes. The Commission also argued that a larger EU budget could contribute to growth. The presidency noted the debate and concluded that the Council had adopted the presidency text for the 2013 budget guidelines.

AOB

The presidency debriefed the Council on the trialogue process on the European Markets Infrastructure Regulation (EMIR). They have reached an agreement with the European Parliament and the regulation should now be adopted by June and published before the European Parliament’s summer recess. The presidency also updated the Council on the review of deposit guarantee schemes. They had not made progress with the European Parliament and the presidency will come back at a later date with suggestions on how to proceed. I intervened to congratulate the presidency and the Commission on reaching agreement on EMIR and made clear that it was important that progress on the Deposit Guarantee Schemes Directive was made on the basis of the Council’s general approach.

The French and German Ministers then presented their joint “Green Paper” on corporate tax convergence.

Eurogroup debrief

Ministers were debriefed over breakfast on the euro group meeting of 20 February where euro area Ministers had agreed a second programme of assistance and accompanying reforms for Greece. In the ensuing discussion there was recognition of the importance of supporting economic growth and the challenges that remain. I welcomed the outcome, but noted that this needed to be accompanied by a genuine and robust push for structural reform. On the wider economic situation the Commission previewed its interim growth forecasts (published on 23 February). Growth in the EU in the first half of 2012 was forecast to be subdued, with a modest return to growth in the second half. Ministers agreed to discuss the forthcoming election of a new president of the European Bank for Reconstruction and Development at March ECOFIN.

European Investment Bank (EIB)

Ministers were alerted to possible future EIB proposals for supporting growth in line with the January European Council statement.