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MEMO/08/670

Brussels, 3 November 2008

Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels, 3 and 4 November 2008

(Amelia Torres, Maria Assimakopoulou)

Troika meeting on EMU@10

Prior to the Eurogroup and Ecofin meetings, the Council troika of present and next two presidencies of the EU plus the Commission and the European Parliament held a meeting on the financial crisis and financial supervision as well as on the EMU@10 Commission report on the first 10 years of Economic and Monetary Union. The main messages of EMU@10 report have gained particular relevance with financial crisis:

  • The euro and its governance have proved to be major assets.
  • The fiscal implications of the crisis and the challenges facing Member States with large current account deficits call for a broadening and deepening of EU surveillance.
  • The economic downturn is making a strong call on the economic resilience of our Member States, and structural reform should therefore remain a priority.
  • The euro area and EU should continue to speak with one voice in global financial governance fora so as to serve our shared interests.
  • Joint efforts to enhance the efficacy of EU wide financial regulation and supervision are strongly called for.

The Parliament is expected to adopt a report on EMU@10 on the occasion of the17-10 November plenary session.

Macro-economic dialogue

The Council, Commission, ECB and Eurogroup President also held a separate meeting with the social partners, the European Trade Union Confederation ETUC and BusinessEurope, on the evaluation of the current economic situation and the appropriate policy-mix.

EUROGROUP (AT)

Eurogroup ministers will meet at 17:30 hrs on Monday 3 November. Joaquín Almunia, Commissioner responsible for Economic and Monetary Affairs will attend as will European Central Bank Governor Jean-Claude Trichet. A press conference is expected to take place after the meeting.

Ministers will discuss the economic situation, including financial market developments and budgetary implications among other things as well as developments in ERMII countries (Denmark and the Baltic countries). Ministers will also discuss the use of financial assistance to EU countries in need during the current crisis, as was proposed by the Commission for Hungary, a subject that will be developed the following day at the Ecofin Council.

Commissioner Almunia will present the autumn economic forecasts unveiled earlier today which point to a European economy at close to a standstill in 2009 on the back of a financial crisis that deepened since mid-September (see IP/08/1617 and full forecast document at http://ec.europa.eu/economy_finance/thematic_articles/article13288_en.htm

ECOFIN COUNCIL

The Council of Economics and Finance Ministers will formally start at 09.30 hrs on Tuesday 4 November. The working breakfast will start at 08:30. The ECOFIN meeting will be attended by Commissioner Joaquín Almunia and Taxation and Customs Union Laszlo Kovacs. A press conference is expected to take place after the meeting.

Follow up of the last European Council (AT)

The Ecofin Council is expected to follow up on the conclusions of the October European Council in particular with regard to the preparation of the international response to the financial crisis.

Commissioner Almunia will present last week's Communication of the Commission "From financial crisis to recovery: a European framework for action" (see http://ec.europa.eu/economy_finance/index_en.htm). The Communication defends that Europe needs to use all policy tools to support the economy and jobs in a coordinated fashion, as it has done for the financial crisis, to ensure that the slowdown is as shorter as possible and to help those that are set to suffer the most. For what concerns budgetary policies, the Commission invites the Member States to draw fully on the flexibility provided by the Stability and Growth Pact; use budgetary policy to encourage structural reforms and strengthen the resilience of our economies in the long run as well as to stimulate innovation and investment; while being clear on red lights so as not to pass on an excessive burden to future generations. The red lines should taken account of the country-specific differences in fiscal room for manoeuvre and the existence (or lack) of strong and credible national budgetary institutions and medium-term budgetary frameworks.

Taxation(MA)

  • Combating VAT fraud: Speeding up exchange of information on Intra-Community supplies

The Council will try to reach agreement on the Commission's proposal to tackle more effectively carousel VAT fraud by speeding up to one month the submission of recapitulative statements and the exchange of information on intra-Community transactions (IP/08/454). When an intra-Community transaction takes place, it currently takes between three to six months for information about that transaction to be sent to the Member State in which the VAT is due, which facilitates abuse by fraudsters.

A quick implementation of these measures is of major importance, as it would send a political signal that the Council is capable of agreeing on a common approach tackling VAT fraud

  • Reduced VAT rates

The Presidency in its effort to advance discussion on VAT reduced rates, has prepared a paper aiming to structure the discussion through questions on certain principles for more permanent solutions. Those principles mainly relate to locally supplied services, no differentiation between Member States, and for any decision by Member States to apply VAT reduced rates to be accompanied by an impact assessment.

  • Excise duties: proposal for a Directive concerning the general arrangements for excise duty

The Council is expected to reach an agreement on the Commission's proposal which provides a legal framework for the use of a computerised system to monitor the movement of duty free excise goods (alcoholic beverages, tobacco products and mineral oils). This new system is aiming to strengthen the fight against excise duty fraud (see IP/08/241). To implement this system, a formal agreement is needed before the end of 2008.

  • Fraud agreement with Liechtenstein

The Council will have an orientation debate on the state of play of the negotiations for an anti fraud agreement with Liechtenstein.

Climate change and risk of volatility in carbon allowances prices under the emissions trading scheme (ETS) after 2012 (BH /AT)

ECOFIN ministers will have an exchange of views on this topic. The Commission believes that the most effective way to avoid excessive price volatility in ETS allowance prices is to establish a clear, predictable and stable regulatory framework, as set out in its proposal to improve the emissions trading scheme, that it presented as part of the “20-20-20” climate and energy package in January of this year. The Commission therefore remains unconvinced of the very need to establish a specific mechanism aimed at addressing price volatility.

Ministerial dialogue with EFTA countries (AT)

The topics of this year's EU-EFTA Ministerial are 'The Financial Crisis', 'Regulatory cooperation' and 'Cooperation on tax fraud'. Both the EU and EFTA face similar challenges in dealing with the financial crisis and need common active policies and cooperation on regulating the financial markets. In parallel a growing concern is tax fraud and tax evation to so called 'tax havens'. Some recent events have caused friction between the EU and it's EFTA partners and cooperation on such matters is now needed more then ever. Meeting these challenges will have potentially significant economic implications. The financial crisis is impacting the real economy to an ever higher degree with time moving on, and urgent common measures need to be taken to limit the effects on growth and employment. This gives Finance and Economy Ministers on both sides of the table a central role to play.


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