ECOFIN

George Osborne Excerpts

Monday 2nd July 2012 Written Statements

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

The Economic and Financial Affairs Council was held in Luxembourg on 22 June 2012. Ministers discussed the following items:

Contributions to the European Council Meeting on 28-29 June 2012—European Semester

Following a ministerial discussion the Council approved the fiscal and economic elements of the draft country-specific recommendations under this year’s European semester for the 27 member states. The Council also approved draft recommendations on the economic policies of the member states of the euro area as a whole. Ministers also discussed the process by which the country-specific recommendations had been arrived at. The recommendations were taken forward for political endorsement at the European Council and are due to be formally adopted by the Economics and Financial Affairs Council in July.

Implementation of the Stability and Growth Pact

The Council adopted decisions closing excessive deficit procedures for Germany and Bulgaria, thus confirming that they have reduced their deficits below the EU’s 3% of GDP reference value. The Council also adopted a decision lifting the future suspension of commitments for Hungary from the EU’s cohesion fund.

Convergence Report from the Commission and the European Central Bank (ECB)

The Commission and the ECB provided an update on their assessment of the readiness for euro membership of the eight euro outs committed to joining the single currency (Bulgaria, Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania and Sweden). This was followed by a brief discussion among Ministers. The assessment showed that none of these member states fulfils the convergence criteria at this stage.

Follow up to the G20 Summit (Mexico, 18-19 June 2012)

The Council was briefed by the presidency and the Commission on the outcome of the G20 summit in Los Cabos (Mexico) on 18 and 19 June. The summit focused on instability in the euro area, as well as on ways to strengthen international financial architecture and regulation; reduce food price volatility; promote “green” growth and greater investment in scientific and agricultural technology and research.

The presidency also looked ahead to the G20 Finance Minister’s meeting on 4 and 5 November in Mexico City, noting the implementation of the 2010 IMF quota and governance reforms, which will be discussed by the IMF executive board.

Financial Transactions Tax

Following a presentation by the presidency, Ministers debated the future direction of this dossier. A number of member states expressed concerns and stated their opposition to an FTT and I intervened to reiterate UK opposition to the Commission’s proposals in this area, given the negative impacts on jobs, growth and on financial activity across the EU at a time when we should be doing all we could to attract business and drive growth. I also underlined that any new proposal put forward for consideration under enhanced co-operation must provide clarity on the scope of the tax and what the revenues would be used for.

The presidency concluded that support for an FTT as proposed by the Commission was not unanimous, but that some member states wished to further consider enhanced co-operation on this dossier. The presidency noted that formal requirements for enhanced co-operation would have to be met, and that next steps will be handled by the incoming Cyprus presidency.

Energy Taxation Directive

The Council discussed progress on this directive and the presidency concluded that while there was agreement amongst member states that minimum tax levels should be laid down in the directive, member states should retain maximum flexibility to determine the structure of their national energy taxes.

Any Other Business

The presidency provided the Council with an update on progress on four financial services directives: the capital requirements directive (CRD4); the credit ratings agencies directive (CRA3); the EU mortgages directive and the directive on the harmonisation of transparency requirements for listed companies.

ECOFIN Breakfast

Over breakfast Ministers were debriefed on the previous evening’s Eurogroup

meeting. Ministers discussed the economic situation, as well as bank recapitalisation and developments in sovereign debt markets. They also discussed the possibility of a capital increase for the European Investment Bank.

ECOFIN Lunch

Over lunch Ministers discussed the multi-annual financial framework for the 2014 to 2020 period.