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Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels 26 and 27 March

European Commission - MEMO/07/119   26/03/2007

Other available languages: none

MEMO/07/119

Brussels, 26 March 2007

Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels 26 and 27 March

EUROGROUP (AT)

Eurogroup ministers will meet at 17:00 hrs on Monday 26 March. Joaquín Almunia, Commissioner responsible for Economic and Monetary Affairs, and European Central Bank Governor Jean-Claude Trichet will attend. A press conference is planned for after the meeting.

Ministers will briefly discuss the economic situation and the outlook for 2007. Momentum in the euro area economy remains strong. Business and consumer survey indicators remain at very high levels and the labour market continues to improve, while inflationary pressures appear low for the moment. They are also expected to have an exchange of views on the developments in the financial markets since they last met.

Eurogroup ministers will then prepare the April 13 G7 meeting in Washington. .

In the context of budgetary surveillance and the annual review of the Stability and Convergence Programmes, ministers will consider the Commission's assessments of the programmes of Belgium and Spain in preparation for Council opinions the following day at the Ecofin(see Ecofin Memo below).

They also will discuss the sustainability of public finances and the role of national fiscal frameworks to achieve this goal in light of the latest stability and convergence programmes. The 2006/07 assessment round confirmed that a broad approach is needed to ensure progress towards sustainable public finances. While significant progress has been made in several countries in reforming pension and health care systems, further efforts are needed. Implementing the Lisbon strategy provides complementary benefits, as it is conducive to economic growth and prosperity and contributes to fiscal sustainability. National fiscal frameworks are important to maintain sound fiscal positions and to promote a growth supportive macroeconomic environment. A number of Member Stateshave adopted initiatives in order to strengthen their national fiscal frameworks. In particular concerning the implementation of medium-term budgetary frameworks and the improvement of fiscal relations across levels of government. However, further efforts are still needed to ensure an improved conduct of fiscal policy in the Member States.

ECOFIN COUNCIL

The European Union's Council of Economy and Finance Ministers will start at 9h30 on Tuesday 27 March. The European Commission will be represented by Economic and Monetary Affairs Commissioner Joaquin Almunia and Internal Market and Services Commissioner Charlie McCreevy, .

EU economic situation and outlook (AT)

Over breakfast, Ministers will briefly discuss the economic situation and outlook. Judging from recent survey data, the momentum in the EU economies remains strong. World economic growth remains robust despite the slowdown of the US economy..

Implementation of the Stability and Growth Pact (AT)

  • Assessment of Stability and Convergence programmes

The Council is expected to give its opinion on the updated stability/convergence programmes on the basis of recommendations put forward by the Commission on 7 March for Belgium and Spain (see IP/07/292) and Latvia , Bulgaria and Romania (see IP/07/293). For Bulgaria and Romania, it is the first convergence programme following accession to the EU on 1 January 2007.

The stability programme of Austria and the convergence programme of the Czech Republic are expected to be examined by the Commission in the course of May.

General budget of the European Union – priorities for 2008 (RS)

The 2008 budget, the second for the financial framework 2007-2013, will both consolidate the current achievements while looking to the future. It will be based on the Interinstitutional Agreement (IIA) on budgetary discipline and sound financial management.

The Council will adopt its conclusion on the priorities for the 2008 budget, as agreed by the Council Budget Committee. It constitutes the initial position of the Council in 2008 budget procedure. The first trialogue between the European Parliament, the Council and the Commission will be held 18th April. The Council stresses the importance of maintaining an overall budgetary discipline. The budget should provide sufficient level of resources to ensure an efficient and effective implementation of EU policies. Member States and the Commission are encouraged to pursue their efforts to deliver better forecasts.

Close budgetary monitoring and ensuring proper budget implementation are top priorities for Dalia Grybauskaite, Commissioner for Financial Programming and Budget. The Commission will then present its preliminary draft budget (PDB) on 2nd May 2007.

Financial Services (OD)

  • Directive on Prudential Assessment of Acquisitions in the Fianancial Sector

Ministers are expected to approve the overall comprommise as adopted by the European Parliement on 13 March.

  • Payment Services Directive

In December 2006 the European Commission brought forward proposals to bring down existing legal barriers to enable the creation of a "Single Payments Area" in the EU that could save the EU economy €50-100 billion per year. The aim is to make cross-border payments – by credit card, debit card, electronic bank transfer, direct debit or any other means – as easy, cheap and secure as 'national' payments within one Member State. Currently each Member State has its own rules on payments, and the annual cost of making payments between these fragmented systems is 2-3% of GDP. Service providers are effectively blocked from competing and offering their services throughout the EU. The proposed Directive, known as the 'New Legal Framework', will guarantee fair and open access to payments markets and will increase and standardise consumer protection. A more efficient and competitive payments market will also mean that individual Europeans pay less for basic banking services, the average yearly cost of which ranges from €34 to as much as €252 across the EU. There is today a huge diversity of prices for the same service from one Member State to the other: a credit transfer can be free of charge in one country and cost more that ten euros in another.[1] The Directive applies to all Member States and all EU currencies, while providing the necessary legal platform for the Single Euro Payments Area (SEPA) proposed by the European Payments Council. The Presidency will report progress on this proposal to Ministers which will be followed by a public debate.

Co-ordination of direct tax systems in the EU (A point)

The Council is expected to adopt conclusions supporting the Commission's Communication, adopted at the end of 2006 (IP/06/1827) for a better coordination of national direct tax systems in the Internal Market. Within the framework of the subsidiarity principle Member States recognise that improved cooperation and coordination between Member States could ensure that national tax systems comply with Community law and interact coherently with each other avoiding discrimination and double taxation, preventing non-taxation and abuse and reducing the compliance costs of business.

The Commission welcomes this achievement in the Council in the area of direct tax matters. This is an indication of the willingness of Member States to engage in this process. The Commission is confident that the Council's conclusions will give an impetus in the implementation of such a coherent approach in specific areas. The Commission has already proposed two areas of taxation where this may be the case: cross-border loss relief (IP/06/1828) and exit taxation (IP/06/1829)


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