ECOFIN

George Osborne Excerpts

Wednesday 30th March 2011 Written Statements

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

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

Economic Governance

The Council agreed a general approach on the package of six legislative proposals aimed at strengthening economic governance in the EU, particularly in the euro area. This agreement respected the provisions in the UK’s protocol to the treaty. The UK negotiated a UK opt-out on the articles in the fiscal frameworks directive pertaining to fiscal rules and won a recital making clear that medium-term budgetary objectives referred to in the directive would not apply to the UK. Negotiations with the European Parliament will now take place with a view to finalising legislation by the summer.

Climate Finance

Ministers adopted Council conclusions on climate finance, which welcome and reaffirm the commitments on climate finance agreed at the UN negotiations in December 2010. The Government support these conclusions. ECOFIN will revisit climate finance following further work by the Commission, Economic and Financial Committee and the Economic Policy Committee. This work will set out the key elements of the mix of international and national, public and private finance instruments needed to deliver scaled-up financial flows after 2012.

Stability and Growth Pact Implementation

Hungarian and Polish Ministers informed the Council of measures they are taking in order to reduce their deficits below 3% of GDP, and an exchange of views followed. The Council called on them to ensure strict compliance with the recommendations it issued under the excessive deficit procedure. The Government agree that member states need to have credible deficit reduction plans in place.

Short Selling and Credit Default Swaps

The presidency updated Ministers on ongoing work on the draft regulation on short selling and credit default swaps. The intention of the regulation is to harmonise short selling requirements across the European Union and harmonise the powers that regulators may use in exceptional situations where there is a serious threat to financial stability or market confidence. The Government’s position is that proposals should not impact market efficiency and liquidity, in particular in relation to sovereign debt. Further work will continue on this regulation before returning to ECOFIN in May for general approach.

AOB

Reform of financial regulations

The Council took stock of progress in the area of financial services regulation following a presentation from Commissioner Barnier. The Government are pleased with the progress which has been made since the financial crisis. However, it is critical that any proposals going forward have a clear evidence base and that thorough, objective impact assessments are carried out, along with extensive consultations.

G20 ministerial meeting in Paris

French Finance Minister, Christine Lagarde, informed the Council of the outcome of a G20 meeting of Finance Ministers and central bank governors held on 18-19 February. The Government believe that the G20 meeting was productive, and it was significant to reach agreement on a set of indicators for assessing external imbalances that threaten the world economy.