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Brussels, 1 December 2008
Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels, 1 and 2 December (Amelia Torres, Oliver Drewes, Maria Assimakopoulou, Valérie Rampi)
Eurogroup ministers will meet at 17:00 hrs on Monday 1 December. 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, with particular attention to the financial market crisis, its impact on the real economy and measures needed to kick-start investment and consumer demand.
The economic situation and outlook for the euro area and the EU continue to be exceptionally uncertain. The measures taken by governments and central banks in mid-October seem to be gradually taking effect in credit markets. Nonetheless, the European economy has fallen into a technical recession and there are risks of contraction in 2009. To counter this bleak picture, the Commission outlined a European Economic Recovery Plan in its Communication of 26 November (see below and also IP/08/1771 and website http://ec.europa.eu/economy_finance/focuson/focuson13254_en.htm
For the latest survey and hard data on the euro area see also:
Next day's Ecofin will also devote a great part of its discussions to the economic situation and the recovery responses, notably as part of the preparations for the December 11-12 European Council.
Eurogroup ministers are also expected to discuss competitiveness developments among euro area members following their endorsement of the proposal in the EMU@10 Communication and Report of May 2008 to broaden macroeconomic surveillance.
The Council of Economics and Finance Ministers will formally start at 10.00 hrs on Tuesday 2 December. The working breakfast will start at 09:00. The ECOFIN meeting will be attended by Commissioner Joaquín Almunia, Administrative affairs, audit and anti-fraud Vice President Siim Kallas, Internal Market and Services Commissioner Charlie McCreevy and Taxation and Customs Union Commissioner Laszlo Kovacs. A press conference is expected to take place after the meeting.
Preparation for the European Council (11-12 December) (AT)
The ECOFIN must agree its contribution to the December European Council concerning the follow up of the European Union's response to the financial crisis and support for the economic activity. Responding to the October European Council request, the Commission has proposed a European Economic Recovery Plan. The Communication of 26 November outlines a coordinated policy response to the slowdown which aims at stimulating demand and lessening the human costs of the downturn while ensuring that the EU policies are in line with the long-term strategic objectives of sustainable growth, public finances and competitiveness. The proposed policy response ensures coherence between the short- and medium-term actions at national and EU level. They build on the core strengths of the EU, including the credible frameworks offered by the Stability and Growth Pact and the Lisbon Strategy. An important element of the Commission's proposal is a coordinated fiscal stimulus which has to be timely, targeted, temporary and coordinated, and should be accompanied where appropriate by relevant structural reforms. (see Economic Recovery Communication and IP/08/1771).
Revision of the Capital Requirements Directive (OD)
Solvency II (OD)
In July 2007 the Commission proposed a ground-breaking revision of EU insurance law designed to improve consumer protection, modernise supervision, deepen market integration and increase the international competitiveness of European insurers. Under the new system, known as 'Solvency II', insurers would be required to take account of all types of risk to which they are exposed and to manage those risks more effectively. In addition, insurance groups would have a dedicated 'group supervisor' that would enable better monitoring of the group as a whole. The proposal will also simplify the legislation and replace 14 directives with a single directive. The Commission aim is to have the new system in operation in 2012. (IP/07/1060) Ministers will continue their discussions with a view to reaching agreement on a common approach.
Revision of the Directive on undertakings for collective investment in transferable securities (UCITS) (OD);
The Commission proposed an important revision of the EU framework for investment funds In July 2007. These funds are known as 'UCITS' (Undertakings for Collective Investment in Transferable Securities). The new provisions will increase the efficiency of the current legislative framework in a number of key areas. First, it will allow UCITS managers to develop their cross-border activities and generate savings consolidation and economies of scale. Second, investors will benefit from a greater choice of investment funds operating at lower costs.
Third, the proposal also seeks to improve investor protection by making sure that retail investors receive clear, easily understandable and relevant information when investing in UCITS. As part of the Commission's Better Regulation Strategy and its firm commitment to simplify the regulatory environment, the new Directive will replace 10 existing directives with a single text. (IP/08/1161) Ministers will continue their discussions with a view to reaching agreement on a common approach
Revision of the Directive on deposit guarantee systems (OD)
On 15 October The European Commission put forward a revision of EU rules on deposit guarantee schemes that puts into action the commitments made by EU Finance Ministers on 7 October. (IP/08/1508)The new rules are designed to improve depositor protection and to maintain the confidence of depositors in the financial safety net. Under the proposed new rules, the minimum level of coverage for deposits will be increased within one year from €20,000 to €100,000, and initially to €50,000 in the intervening period. Individual Member States can choose to add to these minimum levels. In addition, the payout period in the event of bank failure will be reduced from three months to three days. Ministers will continue their discussions with a view to reaching agreement on a common approach
The ECOFIN Council is also to adopt the following conclusions :
The Council is expected to reach conclusions providing some guidelines on its future work on the Commission's proposal to amend the current Savings Taxation Directive, aiming to close loopholes and eliminate tax evasion (IP/08/1697)
Since 2005, the Savings Directive ensures that paying agents either report interest income received by taxpayers resident in other EU Member States or levy a withholding tax on the interest income received.
On 13 November, the Commission made a proposal to improve the Directive, so as to better ensure the taxation of interest payments which are channelled through intermediate tax-exempted structures. It also proposes to extend the scope of the Directive to income equivalent to interest obtained through investments in some innovative financial products as well as in certain life insurance products.
The French Presidency will present a progress report to the Council on the work undertaken on the Commission's proposal to amend the VAT rules applied on insurance and financial services (IP/07/1782)
The proposal is aiming to modernise and simplify the complex VAT rules for financial and insurance services and to secure a level playing field in the EU market for these services as far as VAT is concerned. These services are generally exempt from VAT but the exemption dates from 1977 and the legislation has not kept abreast of developments since then.
The French Presidency will held an other debate and will try to reach an agreement on the Commission's proposal to apply reduced VAT rates for some specific services (labour intensive and locally supplied services) on a permanent basis (IP/08/1109)
The President of the Code of Conduct Group, Ms. Kennedy will report on the work undertaken under the French Presidency.
The Council is expected to reach conclusions on the future work programme of the Group (point A).
The Council is expected to adopt a resolution (political commitment) to avoid double taxation when individuals or business transfer their business assets from one Member State to another.
In December 2006, the European Commission invited Member States to better coordinate their national exit tax rules in order to make them compatible with the principle of freedom of establishment and to avoid double taxation. (IP/06/1829)
In many Member States, exit taxes are levied on accrued capital gains when taxpayers move their residence or transfer assets to another Member State while in domestic transfers taxation only occurs on realised capital gains (that is when the assets are sold or otherwise disposed of).
Court of Auditors Annual Report 2007 (VR)
Mr Vitor Caldeira, President of the European Court of Auditors, will present to the Ministers of Finance the Court's annual report on the implementation of the 2007 EU budget, and Commission Vice-President Siim Kallas will address the Council (see IP/08/1665 and SPEECH/08/594) .