ECOFIN (20 June 2011)

George Osborne Excerpts

Tuesday 14th June 2011 Written Statements

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

The Economic and Financial Affairs Council will be held in Luxembourg on 20 June 2011. The following items are on the agenda:

Legislative proposals on economic governance

Given the Hungarian presidency’s aim of reaching agreement on the economic governance legislative package before the end of June, they have scheduled an informal ECOFIN dinner for 14 June in Brussels, which the Financial Secretary will attend. Trialogues with the European Parliament (EP) are ongoing on an almost daily basis, and the presidency is keen to get Finance Ministers’ support for an updated general approach on the six legislative proposals. Negotiations with the Parliament will then continue, with the aim of agreeing the final compromise package at the 20 June ECOFIN.

Greater economic stability within the euro area is firmly in the UK’s interests, and the Government broadly support this legislation; it should be noted that the UK’s partial opt-out from the fiscal frameworks directive remains protected. The EP is attempting to secure: a greater role in economic surveillance including through public debates and hearings with member states; a stronger role in setting the scoreboard of indicators for macro-economic imbalances; and to introduce reverse qualified majority voting more widely. It will be important to ensure that the presidency maintains a firm line in negotiations with the Parliament given that, under the treaty, the EP has a limited formal role in fiscal and macro-economic surveillance.

Proposal for a Decision of the European Parliament and the Council granting an EU guarantee to the European Investment Bank (EIB) against losses under loans and guarantees for projects outside the EU

The presidency will report back on trialogues with the European Parliament, and seek Council agreement to adopt a new EIB external lending mandate as part of the mandate’s mid-term review. The Government will work to ensure that the EIB’s external lending is allocated appropriately.

Directive on Deposit Guarantee Schemes

This directive is a revision of the 1994 EU rules on deposit guarantee schemes, in order to improve depositors’ confidence and promote financial stability. The new rules are designed to ensure sound, effective deposit guarantee schemes across the EU and EEA. The Government broadly support the directive, and will seek to ensure that it meets its aims of improving depositor confidence and providing a level playing field for depositors without imposing unreasonable costs on the industry.

Regulation on over-the-counter derivatives, central counterparties and trade repositories (EMIR)

The Commission issued legislative proposals in September to implement G20 commitments on the regulation of derivatives markets, and the presidency will aim to agree a general approach at this ECOFIN. The Government welcome these measures to increase transparency and reduce systemic risk in derivatives markets, and believe that this must be done in an internationally consistent and non-discriminatory way, in line with the G20 commitments and with the agreement on the establishment of the European supervisory authorities last year.

Proposal for a Regulation of the European Parliament and the Council establishing technical requirements for credit transfers and direct debits in euros

The UK supports the proposed regulation, which will facilitate the creation of a single market for electronic payments in euros.

European Banking Authority stress testing

This item will be an orientation debate on how to communicate the results of the European Banking Authority (EBA) stress tests, which are due to be published in the first half of July. Finance Ministers are also likely to discuss how to link the results to the backstops measures put in place by member states to address potential vulnerabilities in their banking systems. The Government believe that it is important to increase confidence in the European banking system through the implementation of coherent and transparent measures to address any vulnerabilities. It is also important to demonstrate the EU’s commitment to medium-term reforms, as agreed internationally, by implementing Basel III in full.

European Semester

ECOFIN will agree country-specific opinions and recommendations (CSRs) on member states’ fiscal and structural reform policy, under the EU’s stability and growth pact (SGP) and Europe 2020 strategy. Member states are expected to take these CSRs into account when preparing their budgets and structural reform plans for the year ahead. The European Commission’s proposed recommendations to the UK are supportive of the Government’s fiscal plans, and the Commission urges the Government to proceed as planned with implementing fiscal consolidation. Other recommendations focus on the housing market, tackling youth unemployment, addressing the proportion of people in jobless households, and improving access to finance for SMEs. The Government will negotiate the precise drafting of these recommendations in the lead-up to ECOFIN. The recommendations will then be formally adopted by the European Council on 24 June as Council recommendations.

Quality management for European statistics

Finance Ministers will agree conclusions on ensuring the quality of public finance statistics in the EU. The Government support the principles of this proposal, and will work to ensure that the approach to implementation allows proper usage of the relevant statutory bodies’ existing responsibilities.

Code of Conduct (business taxation)

ECOFIN will agree conclusions on the work of the code of conduct group over the last six months. The code of conduct is an EU-level political agreement between member states to work co-operatively to identify and eliminate harmful business tax measures in the EU and prevent the introduction of new ones. The code group’s report is a standing ECOFIN agenda item at the end of each presidency, and the conclusions follow standard wording.