Brussels, 26 February 2007
Eurogroup ministers will meet at 17:00 hrs on Monday 26 February. 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.
The Eurogroup will discuss the economic situation and outlook following the release of the Commission's Interim Forecast (16 February 2007). Economic growth reached 2.7% in the euro area in 2006, up from 1.4% in 2005. This was the highest growth rate since 2000. Higher oil prices kept consumer price inflation at 2.2% in 2006, unchanged from 2005. Yet core inflation (excluding energy an unprocessed food prices) remained at around 1.5%.
Global growth and survey data indicate that the euro area economy will continue to grow above potential as the risks have diminished compared to the autumn forecast. Against this background, the Commission's Interim Forecasts projects GDP growth at 2.4% in 2007. At the same time, inflation is seen lower at 1.8% in the euro area.
Ministers will also continue their discussion on the adjustment channels within the Economic and Monetary Union, by focusing on recent and prospective developments in wages and labour cost.
Ministers will finalise the recommendations to the euro area and the euro area Member States, which are a part of the updated Broad Economic Policy Guidelines 2005-08. The recommendations are based on the Commission's Annual Progress Report, which assesses the progress Member States have made implementing their own commitments to reform their economies. The euro area countries are recommended, together with their specific country recommendations, to make progress in the areas of budgetary consolidation, quality of public finance, competition in services, including financial market integration, and flexibility and security on labour markets. These recommendations aim at improving the capacity of euro-area Member States to adjust faster and more smoothly to economic changes. These policy areas have also been identified in the EU Economy 2006 Review on adjustment dynamics in the euro area.
Finally, ministers will discuss the Commission’s recent recommendations for Council opinions on the updated stability programmes of euro zone members Germany, France, Italy, the Netherlands, Slovenia, Ireland, Luxembourg, Finland, Greece and Portugal (see below). For Slovenia, it is the first stability programme following its adoption of the euro on 1 January 2007.
The European Union's Council of Economy and Finance Ministers will start at 9h30 on Tuesday 27 February. The European Commission will be represented by Economic and Monetary Affairs Commissioner Joaquin Almunia, Enterprise and Industry Vice President Gunther Verheugen, Internal Market and Services Commissioner Charlie McCreevy and Administrative affairs, Audit and Anti-fraud Vice President Siim Kallas.
EU economic situation and outlook (AT)
Over breakfast, Ministers will briefly discuss the economic situation and outlook (for background see above).
Implementation of the Stability and Growth Pact (AT)
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 23 January for Denmark, Germany, France, Italy, Cyprus, the Netherlands, Slovenia and Slovakia (see IP/07/71 and IP/07/72), of 7 February for Ireland, Luxembourg, Hungary, Malta, Poland and Finland (see IP/07/149, IP/07/150 and IP/07/151) and of 13 February for Estonia, Greece, Lithuania, Portugal, Sweden and the United Kingdom (see IP/07/174 and IP/07/175)
The next group of programmes will be examined by the Commission on 7 March and is expected to concern Belgium, Bulgaria, Spain, Latvia and Romania.
The Council will discuss the fiscal situation in Poland, which is under the excessive deficit procedure (EDP) since 2004. It is expected to endorse the Commission's recommendation to call on Poland to take effective action to correct its present excessive deficit in 2007 and ensure that this correction is durable (see IP/07/149).
Preparation of the European Council (8-9 March 2007)
Ministers are expected to adopt the Key Issues Paper (KIP) prepared by the German Presidency. The KIP is a main contribution of the ECOFIN Council to the Spring European Council. It focuses on the topics where the ECOFIN Council is in charge, in particular: i) safeguarding the long-term success of the EMU; ii) improving the future prospects of public budgets – sustainability and quality of public finances; iii) tax policy in Europe – further development in the field of direct taxation; iv) integrating financial markets to raise efficiency and international competitiveness. After its adoption, the KIP will be sent to the Spring European Council.
Ministers will finalise the Recommendation on the 2007 updating of the BEPGs, which has been prepared on the basis of country conclusions in the Commission's latest Annual Progress Report (see IP/06/1758 of 12.12.2006). The Recommendation identifies, Member State by Member State, the broad strengths of and challenges facing Member States' reform efforts. Above all, it identifies where Member States clearly need to step up action. The assessment behind the Recommendation takes a coordinated Community view of structural reform, both in view of the way forward and in assessing the relative merits of Member States' reform programmes.
After the ECOFIN Council adopts the final version of the BEPGs update, the BEPGs package will be sent to the Spring European Council.
In its Strategic Review of Better Regulation and the attached Working Document of 14 November 2006, the Commission proposed that the 2007 Spring European Council fixes a reduction target of 25 % of administrative burdens, to be achieved jointly by the EU and Member States by 2012. On 24 January 2007 the Commission stepped up its efforts to reduce unnecessary burdens on businesses. It adopted an Action Programme specifying how the 25 % reduction is to be achieved. The Programme presented the Commission’s plans for measuring and reducing unnecessary administrative burdens in the EU. It demonstrates in concrete terms the way in which the Commission intends to work with Member States to cut administrative burdens on businesses by a quarter by 2012. The Programme focuses on information obligations in thirteen selected priority areas including company law, employment relations, taxation/VAT, statistics, agriculture and transport. It's aims are to measure the cost of the administrative burden in these key sectors and identify information obligations for which proposals will subsequently be adopted to remove unnecessary burdens. The Commission identified as well ten concrete reduction measures, for unprecedented fast track action which could be decided upon at the March Spring Council. These measures alone could in one fell swoop, reduce the burdens on businesses by 1.3 billion euro on an annual basis. Vice President Verheugen presented the Commissions action plan to Ministers at the Competitivity Council on 19 February. which was followed by aa public debate. In the public debate, the Council took note of the presentation by Günter Verheugen, Vice-president of the Commission, and had an exchange of views. The Council stressed the importance of reducing administrative burdens and supported the Commission's Action Plan with an EU reduction plan of 25 % and has agreed to set ambitious targets for national reduction plans. The ECOFIN Council is expected to adopt conclusions.
General budget of the European Union – discharge budget 2005 (MS)
The Council is expected to recommend that Parliament grant discharge to the Commission for the implementation of the 2005 budget. The Council draws its conclusions on the observations made in the annual report of the Court of Auditors.
Financial Services – Clearing and Settlement (OD)
On 7 November 2006, trading and post-trading infrastructure providers presented Commissioner McCreevy with a Code of Conduct on Clearing and Settlement. The Code contains commitments in three areas: (i) price transparency, (ii) access and interoperability, and (iii) service unbundling and accounting separation. These commitments are to be implemented in three phases. The price transparency commitments were to be complied with by 31 December 2006. The deadlines for the remaining two areas are 31 June 2007 and 1 January 2008 respectively. By agreeing the Code, the trading and post-trading infrastructure providers responded to the Commissioner's call made at the European Parliament in July 2006 for the industry to take decisive action to resolve the problems of EU cross-border clearing and settlement. In December 2006 the Commission set up the Monitoring Group of the Code of Conduct on Clearing and Settlement (MOG) which met for the first time in January 2007. The Commission will report to the Council on the conclusions of the MOG which indicate that over all the Code has had a promising start.