ECOFIN (15 February 2011)

George Osborne Excerpts

Monday 28th February 2011 Written Statements

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

The Economic and Financial Affairs Council was held in Brussels on 15 February 2011. The following items were discussed:

Economic Governance

The Council held a first discussion on a package of legislative measures intended to strengthen economic governance in the EU, particularly in the euro area, in order to address the challenges posed by the sovereign debt crisis, and prevent the emergence of similar problems in the future, while fully respecting the provisions in the UK’s protocol to the treaty. In line with the deadlines set by the European Council, the presidency’s intention is to reach agreement on a general approach on all six proposals at the 15 March ECOFIN.

Savings Taxation Directive and Anti-fraud Agreements with Third Countries

The Council held an orientation debate on proposals to strengthen the provisions of the savings directive on the taxation of savings interest, and on anti-fraud and tax information exchange agreements with Andorra, Liechtenstein, Monaco, San Marino and Switzerland. The Government support the presidency’s aim to maintain momentum on these proposals, so as to enable the Council to make progress as soon as possible.

Preparation of the European Council (24-25 March 2011)

a) Macro-economic and fiscal guidance

The Council adopted conclusions on macro-economic and fiscal guidance for the EU, under the new European semester. The Government believe the reform priorities set out in the conclusions are important and necessary steps to help promote economic growth in the EU and its member states.

b) Appointment of an Executive Board Member of the European Central Bank

Ministers adopted a recommendation on the nomination of Peter Praet (Belgium) as an executive board member of the European Central Bank to succeed Gertrude Tumpel-Gugerell, whose term of office expires on 31 May.

Implementation of the Stability and Growth Pact

The Council took note of a communication from the Commission assessing action taken by Bulgaria, Cyprus, Finland and Denmark in order to bring their government deficits below 3% of GDP. It was agreed that these member states had taken effective action regarding their deficits, and that no further steps under the EU’s excessive deficit procedure were required at present.

Preparation of the G20 Meeting of Finance Ministers and Governors (18-19 February)

The Council endorsed EU terms of reference in preparation for a meeting of G20 Finance Ministers and central bank governors to be held in Paris on 18-19 February. Discussions are expected to focus on the global economy and the G20 framework for growth, the reform of the international monetary system, commodities, financial regulation, and other issues such as development.

Discharge procedure in respect of the implementation of the 2009 EU budget

The Council adopted a recommendation to the European Parliament on the discharge to be given to the Commission for implementation of the EU’s general budget for 2009. The Dutch, Swedish and UK delegations, withheld their consent on the discharge. This marks a step change in the UK Government’s approach to financial management in the EU; the Government consider it unacceptable that the European Court of Auditors has not been able to grant a positive statement of assurance on the EU budget as a whole for the 16th year in succession.

Together with the Netherlands and Sweden, the Government also submitted a joint declaration, setting out concrete actions that would improve financial management (see attached).

Budget guidelines for 2012

The Council adopted conclusions setting out their priorities for the EU’s general budget for 2012, which will serve as the basis for negotiation with the European Parliament and the Commission later this year. The conclusions emphasise the need to take into account economic and budgetary constraints at the national level. The Government believe that the efforts made to curb the EU budget’s growth in 2011 must be stepped up for the 2012 budget.

Joint declaration signed by the Netherlands, Sweden and the United Kingdom

With reference to:

The European Court of Auditors’ annual report on implementation of the 2009 EU budget;

Discharge to be given to the Commission in respect of the implementation of the budget for the financial year 2009;

Draft Council recommendation 5891/11 FIN 47 PE-L 14, + ADD 1, + ADD 2;

The Netherlands, Sweden and the United Kingdom are concerned that:

For the 16th year in succession, the European Court of Auditors has been unable to grant a positive unqualified statement of assurance on the EU budget as a whole;

The slow pace of reforms to the financial management of EU funds is detrimental to the credibility of the EU budget as a whole.

The Netherlands, Sweden and United Kingdom highlight that independent EU-level audit is a crucial function and we therefore strongly support the work of the European Court of Auditors;

The Netherlands, Sweden and the United Kingdom agree with the European Court of Auditors that improving the quality of spending should be a high priority in order to attain significantly better results in the annual report on the 2010 budget.

The Netherlands, Sweden and the United Kingdom want to see concrete steps towards achieving the following specific objectives before the Council debates discharge of the 2010 budget:

Member states are responsible for implementing the majority of funds from the EU budget in co-operation with the Commission. Member states are responsible for conducting checks and for putting in place an effective and efficient control system. As part of a closer dialogue with member states, the Commission is invited to make proposals and to strengthen member state responsibility. Member states should account for the administration of EU funds at national level, including the proper functioning of internal control systems;



For reasons of transparency and in order to incentivise sound financial management, member states’ annual summaries should be made publicly available. At the same time member states should be obliged to provide analysis of financial management data as an integral part of the annual summaries;



In support of a risk-based approach to auditing, a more structured dialogue between the Court of Auditors, the Commission and member states is necessary. The Commission should bring forward proposals to enable a stronger focus on the audit of larger projects and institutions which have a proven track record of risk.

The forthcoming negotiations of the financial regulation provide an opportunity to take forward these proposals.