ECOFIN

George Osborne Excerpts

Tuesday 20th December 2011 Written Statements

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

The Economic and Financial Affairs Council was held in Brussels on 30 November 2011. The following items were discussed:

Breakfast: debrief from Eurogroup meeting of 29 November and discussion of the economic situation

Council heard that Eurogroup had agreed the sixth tranche of funding for Greece under its assistance package. It also received an update on the options for leveraging the European financial stability facility. Council then discussed bank capital and funding, following up on the European Council of 26 October, and agreed that capital requirements needed to be met without deleveraging, I made it clear that if required, funding schemes needed to be at national level. This was agreed. I also called for early discussion of progress on the capital requirements directive.

Follow-up to the G20 Summit of 3-4 November in Cannes

France provided a debrief of the summit. They confirmed that the major topic of discussion had been the euro area crisis and that the EU had been urged to agree a comprehensive approach to the crisis. They also noted that the summit had discussed ways of increasing IMF resources.

Annual Growth Survey (AGS)

The Commission presented its second annual growth survey and set out five key priorities: fiscal consolidation (while taking account of the need for growth and for differentiation between member states); restoring normal lending conditions, with particular attention to SMEs; completing the single market; reforms to modernise labour resources (in particular ensuring wages better reflect productivity, improving labour mobility, and addressing youth unemployment); and efficient public administration.

Second economic governance package

The Commission presented two legislative proposals and a discussion paper. The first of the legislative proposals relates to strengthening budgetary surveillance within the euro area, particularly for member states in excessive deficit. It would require euro area member states to submit their draft national budgets to the Council and the Commission by 15 October of the preceding year for assessment. The second proposal is a draft regulation on the surveillance of euro area member states experiencing severe financial disturbance. It set out a process of more comprehensive monitoring for member states receiving a programme of financial assistance from EU and IMF-backed funds. Such monitoring could also be applied to member states not receiving assistance but considered to be at risk.

The Commission discussion paper proposed three options for stability bonds: full substitution of national issuance by stability bonds with joint and several guarantees; partial substitution of national issuance with joint and several guarantees; or partial substitution of national issuance with several but not joint guarantees. The Commission noted that stability bonds would create a deepening of economic and monetary union and this would need to be accompanied by parallel measures to strengthen economic governance. Some options would also require treaty change. The Commission said that it would prepare further steps on euro area economic governance by the end of 2011.

There was no substantive debate, particularly not on stability bonds, but a number of member states expressed support for the general principle of further strengthening euro area economic governance.

Recommendation on a nomination to the executive board of the European Central Bank

This was added to the agenda as a result of discussion over breakfast. Council adopted a recommendation on the nomination of Benoît Coeuré of France, to replace Lorenzo Bini Smaghi of Italy, who has announced his resignation.

Economic and financial impact of EU legislation

Council discussed conclusions addressing the need for impact assessments of proposed EU legislation, and for all such legislation to take account of the need to ensure sustainable public finances and create jobs and growth. The UK intervened to support the conclusions. After much discussion conclusions were agreed with a number of amendments.

Court of Auditors’ 2010 Report on the EU Accounts

The President of the Court of Auditors presented its report. In the auditors’ view, the budget presents fairly the position and cash flow of the EU, although there remains scope for improvement. Control systems are only partially effective and overall there has been an increase in the level of errors. The Commission highlighted that the report showed progress had been made. The UK, the Netherlands and Sweden all expressed concern at the increased error rate. The presidency noted the report, which will be further considered by Council in February 2012, when Ministers will vote on discharge of the 2010 accounts.

EU Statistics

Council adopted conclusions welcoming the report of the European Statistical Governance Advisory Board and inviting the Commission to put forward proposals regarding the professional independence of national statistical authorities and EUROSTAT.

Code of Conduct (business taxation)

This item was withdrawn from the agenda by the presidency and is now expected to be considered by Council in January 2012.