Brussels, 9 February 2009
Troika with the European Parliament and Macro-Economic Dialogue (AT)
In the afternoon of Monday (starting 12:15) the Troika of past, present and following Ecofin presidencies will meet representatives of the European Parliament to discuss the economic and financial situation, the implementation of the European recovery plan and the state of preparations for the G-20 summit on financial market regulation and a new international financial architecture, on 2 April, in London. The meeting will be followed by a Macro-Economic Dialogue between EU finance ministers and representatives of European employers and trade unions.
Eurogroup ministers will meet at 17:00 hrs on Monday 9 February.
Commission President José Manuel Barroso and 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.
Euro area ministers will discuss the economic situation and developments in the financial markets as well as implications for public finances. Commissioner Almunia is expected to say that data released since the cut-off date of the interim forecast (13 January 2009) largely confirm the bleak picture described in the forecast. On the external side, world trade and industrial production deteriorated sharply by end-2008. On the domestic side, hard data have continued to send worrying signals, while survey indicators have given a glimmer of hope, showing some tentative signs of stabilisation. Although improving in some segments, the overall situation in financial markets remains fragile.
When presenting the updated forecasts, Commissioner Almunia said he was hopeful that the measures to stabilise the financial market, the easing of monetary policies and the economic recovery plans would to put a floor under the deterioration of the economy this year and create the conditions for a gradual recovery in the second part of 2009. He added that the top priority is to make those measures work effectively: to improve the flows of credit at reasonable prices and to implement the fiscal stimulus packages quickly to stimulate investment and private consumption (see IP/09/67). Recently he has cautioned that so long as toxic assets remain on bank's balance sheets they will continue to undermine confidence and hamper lending (see SPEECH/09/24 of 27 January). On budgetary policies, he said it is also crucial that Member States explicitly commit that they will reverse the deterioration of public finances when the economy is back on track so as to ensure their sustainability in the medium-to-long term.
For the latest euro area indicators see:
Euro area ministers are also expected to prepare a number of upcoming
international meetings, starting with that of the G7 Finance Ministers on 13-14
February, in Rome (Italy chairs the G7/G8 meetings in 2009) The meeting is
expected to discuss market integrity and transparency on top of the world
economic outlook and financial markets among other issues.
With the labour market expected to deteriorate significantly (see January 19 forecasts), Ministers will discuss measures already undertaken to mitigate the impact of the crisis and limit job losses. They will also exchange views on which measures they consider particularly effective in providing short-term relief to the labour market while strengthening the resilience of the euro area economy in the medium term and avoiding a structural deterioration in the employment levels, which would impact on the recovery. For the latest considerations on the evolution of the euro area's labour market see the Commission's Interim economic forecasts, January 2009.
The Council of Economics and Finance Ministers will formally start at 10.00 hrs on Tuesday 10 February. It will be preceded by a working breakfast . The ECOFIN meeting will be attended by Commissioner Joaquín Almunia, Internal Market and Services Commissioner Charlie McCreevy, Competition Commissioner Neelie Kroes, Budget and Financial Programming Commissioner Dalia Grybauskaite, Taxation and Customs Union Commissioner Laszlo Kovacs Administrative affairs, audit and anti-fraud Vice President Siim Kallas. A press conference is expected to take place after the meeting.
Economic situation and outlook (AT)
Ministers will discuss over breakfast the economic and financial situation in the EU, including the financial rescue packages and the issue of impaired assets.
Data released since the cut-off date of the interim forecast (13 January 2009) largely confirm the bleak picture that was anticipated in the Commission's interim forecast. On the external side, world trade and industrial production deteriorated sharply by end-2008. On the domestic side, hard data have continued to send worrying signals, while survey indicators have given a glimmer of hope, showing some tentative signs of stabilisation. Although improving in some segments, the overall situation in financial markets remains fragile. (see Interim Forecast and IP/09/67 and SPEECH/09/24 by Commissioner Almunia at a financial services conference, in Brussels.
The Single Market Review
Ministers are expected to agree draft conclusions of "The Single Market Review – One year on". The progress made over the past year in implementing the Single Market Review is summarised in two Commission Staff Working Documents which were issued as part of the Lisbon package in December 2008. The first highlighted actions taken to raise consumer confidence and encourage firms to employ, invest and innovate. The second document,
"Market monitoring: State of play and envisaged follow-up", gives an account of the recent progress made on market monitoring. This approach is of particular importance in the current economic climate as it will allow to better identify and prioritise markets and sectors where adjustments can deliver gains in terms of growth, job creation and consumer welfare. Results are expected by the end of 2009.
The European Economic Recovery Plan / Contribution to the Spring European Council Conclusions (AT)
The Ecofin Council will have a first horizontal discussion on progress in
implementing the Recovery Plan proposed by the Commission in November and
endorsed by EU leaders at their summit in December. In it, Member States agreed
to a coordinated budgetary stimulus amounting to 1.5% of GDP, including 1.2% in
national stimulus measures. The total amount of support announced by Member
States so far is estimated by the Commission at between 3 and 4% over 2009 and
2010. Using the commonly-agreed methodology for adjusting government balances
for the cycle, above 1% of EU GDP would be due to discretionary policies while
the automatic stabilisers – that are particularly strong in Europe –
are calculated at around 1 3/4%. In addition, there are a number of
below-the-line (outside budget) operations, notably increased investment by
Ecofin ministers are also expected to have an exchange of views on the financial aspects of the Commission's proposals for the €5 billion package in the context of the Economic Recovery Plan (the 0.3 percentage points out of the 1.5pp total). See IP/09/142 and MEMO/09/36 and MEMO/09/35.
The debate will help prepare the contribution of the ECOFIN Council to the Spring European Council of 19-20 March.
The Ecofin Council will also have an orientation debate on a Key Issues Paper for the Spring European Council based on an outline prepared by the Czech Presidency.
Reduced VAT rates (MA)
The Presidency will try to advance discussions on the way forward in applying VAT reduced rates. As a follow-up to the December 2008 European Council conclusions, the ECOFIN Council should settle the issue of reduced rates in certain sectors by March 2009.
Background information: IP/08/1109.
Discharge procedure – budget for 2007 (VR)
ECOFIN will consider a recommendation on granting discharge to the Commission for the 2007 EU budget. This recommendation will subsequently be presented to the European Parliament's budgetary control committee.