EU Finance Ministers hold Ecofin Council meeting in Brussels
Brussels, 10th February 2009
Czech Minister of Finance Miroslav Kalousek chaired the Ecofin Council for the second time. With respect to the preparations for the Spring European Council, the Finance Ministers discussed the implementation of national measures under the European Economic Recovery Plan. In relation to this issue the Ecofin Council also touched upon issues of space for the execution of fiscal stimuli and the appropriate timing of budget consolidation.
As the next point on the agenda, the Czech proposal for the structure of the Key Issues Paper on Economic and Financial Affairs, to be submitted for adoption at the Spring Ecofin Council in March, was received positively. This document will include current issues of financial stability and the operation of financial markets, reform of the international financial architecture, fulfilment of the approved Recovery Plan and continuation of structural reforms; and it will become the main contribution of the Finance Ministers to the Spring European Council.
The Ministers held an intensive debate on the issue of reduced VAT rates in certain sectors, the application of which was supported by the December European Council. With respect to the following European Council, the Ministers agreed to cooperate further in order to propose a set of sectors that would benefit from the reduction of VAT rates, resulting in economic growth and higher employment.
The Ministers also exchanged opinions on the package of measures for increased support for energy projects, high-speed Internet and new challenges in agriculture. This package was proposed by the European Commission in order to fulfil the Recovery Plan. They focused on the financial aspects of the package – the projects need to be granted financial means from the EU budget. A general agreement on the proposals should be reached at the meeting of Ministers for General Affairs.
The EU budget was the next point on the agenda of the meeting – the Ecofin Council adopted the recommendation of the Council for the 2007 EU budget discharge by qualified majority. This decision was based on the report of the European Court of Auditors that was presented to the Ministers at the December meeting of the Ecofin Council. Presently, the European Parliament will also comment on the utilisation of the EU budget.
The Ministers adopted the conclusions on the review of the internal market. In these conclusions a consensus is reached that it is necessary to further develop the services of the internal market despite the current negative macro-economic development. An operational internal market is a necessary condition for the reinforcement of the competitiveness, stability and growth-potential of the European economies.
On the basis of the progress report submitted by the European Commission, the ECOFIN Council adopted the conclusions on the SEPA project (Single Euro Payments Area). The ambition of this project is to make payments in the whole of the eurozone easy and secure and to put national and cross-border payments on an equal footing. The choice of a bank or where to maintain a bank account would then make no difference for the client.
The Ministers also discussed short selling - the tactics of speculating on the decrease of share prices and the current problems faced by the securities market. They asked the European Commission and the Committee of European Securities Regulators (CESR) to take a closer look at this issue.
At the working breakfast the Ministers had an informal discussion on the current economic and financial situation and also on the G20 process which is heading towards the London meeting of leaders in April 2009. The Ministers were informed about the results reached by the G20 working groups that focus on the issue of the regulation of financial markets and international financial institutions. The G20 process also involves a parallel debate on the macroeconomic framework and global coordination of economic policies. The Ministers stressed mainly the need for coordinated action by the EU Member States and the necessity for the EU to play an active role in the search for solutions to the global economic crisis. During the breakfast they also discussed the future direction of rescue packages for the financial sector including possible measures aimed at the banks’ “bad assets”. They agreed that the implementation of individual measures at national level must be carried out through joint and coordinated action if fair competition is to be maintained. Intervention directed at bank assets can form an important part of the strategy to boost the confidence of the market and to trigger the lending process in the real economy (approved in October last year). This is why the Ministers endorsed the formulation of common principles concerning a consistent approach to valuing assets, sharing risks and minimising moral hazard while maintaining a degree of flexibility in the choice of measures (insurance, handover of assets or a combination of both), the assets and institutions selected. There is also a need to ensure full transparency of the schemes. Over the next two weeks, these general principles will be finalised by the European Commission in close cooperation with the Economic and Financial Committee.
During the working lunch the Ministers discussed the future directions of the Lisbon Strategy after 2010, especially in light of the recent economic developments. They stated that reform-oriented policies play an important role in combating the economic crisis, structural reforms thus becoming even more important in the current situation.
Radka Kohutova,
Spokeswoman of the Ministry of Finance
Related Information - Council of the EU Conclusions (ECOFIN)
