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Brussels, 7 February 2013
Preparation of Economic and Finance Ministers Council, Brussels, 12 February 2013
The EU's Council of Economic and Finance Ministers will take place on Tuesday, 12 February at 10.30. The European Commission will be represented by Olli Rehn, Vice President and Commissioner for Economic and Monetary Affairs and the Euro, Michel Barnier, Commissioner for Internal Market and Services, Algirdas Šemeta, Commissioner for Taxation and Customs Union, Audit and Anti-Fraud and Janusz Lewandowski, Commissioner for Financial Programming and Budget. A press conference is expected to take place after the meeting.
1 Discharge to be given to the Commission in respect of the implementation of the budget for 2011 (ET)
The 27 EU Finance Ministers are expected to recommend granting discharge to the Commission for the implementation of the EU budget in 2011. The recommendation will be based on the Court of Auditors' annual report (see IP/12/1174) and requires qualified majority in Council. Following its adoption, the recommendation will be presented to the European Parliament's budgetary control committee. The European Parliament's final plenary vote on the budget discharge is scheduled for April 2013. The Council recommendation is an essential part of the budgetary discharge procedure (as laid down in article 319 of the Treaty on the functioning of the European Union).
2 Council guidelines for the budget for 2014 (PF)
Commissioner Lewandowski will inform the Council of the difficulties in preparing the Draft 2014 EU budget in the absence of an agreement on the 2014-2020 Multiannual Financial framework as 2014 will be the first year of the new financial period and that the Commission must start working on the draft budget without knowing what ceilings and what programmes will be adopted. He will also remind Member States of the recurrent problems of payment appropriations in the EU budget: these last three years, voted budgets were consistently below the needs and thus created a snowballing effect of unpaid bills rolled over onto the following year. He will stress that Europe must start the new financial period with “a clean budgetary slate” rather than carrying the burden of past underfed budgets.
3 Preparation of G20 Meeting of Finance Ministers and Governors (Moscow, Russia, 15-16 February 2013) (SOC)
Ministers will exchange views on the upcoming G20 Meeting of Finance Ministers and Governors that will take place in Moscow on 15-16 February 2013.
Ministers are expected to agree that the focus of the discussions on the global economy should be on the need for credible medium-term fiscal consolidation plans in the US and Japan. Tail risks have significantly receded in the euro area thanks to strong policy actions.
Moreover, Ministers are expected to underline that it is essential to follow up on the commitment by G20 Leaders at the Los Cabos Summit to identify by this year's St. Petersburg Summit "credible and ambitious country-specific targets for the debt-to-GDP ratio beyond 2016".
Ministers will also discuss the ongoing IMF quota reform. They are expected to welcome the agreement in the IMF to integrate the quota formula discussions with the 15th General Review of Quotas. The completion of the review is due in January 2014.
4 Annual Growth Survey 2013 (SOC)
Ministers are expected to adopt the conclusions on the Commission's third Annual Growth Survey (AGS) which the Commission adopted on 28 November 2012.
The AGS kick-starts the European Semester for economic policy coordination, which aims to ensure that Member States align their budgetary and economic plans with the Stability and Growth Pact and the Europe 2020 Strategy. The main message of the AGS for this year is that while EU policies are beginning to show results, there is no room for complacency as continued reform is needed to ensure sustainable growth and jobs. That is why the Commission considers that the five priorities outlined in the AGS for 2012 (see MEMO/11/821) remain valid. These five priorities are: pursuing differentiated, growth-friendly fiscal consolidation; restoring normal lending to the economy; promoting growth and competitiveness for today and tomorrow; tackling unemployment and the social consequences of the crisis; and modernising public administration (see IP/12/1274, MEMO/12/910). The European Council on 13/14 December agreed with the identified priorities and tasked the Council to continue discussions in the run up to the European Council on 14/15 March, which will issue guidelines for Member States' economic policies. Vice-President Olli Rehn recently underlined that it is essential to stay the reform course. "Making real progress on our policy agenda by making an effective use of the European Semester will be a crucial test of Europe's credibility."
5 Alert Mechanism Report 2013 (SOC)
Ministers are expected to welcome the Alert Mechanism Report (AMR) which the Commission published on 28 November to launch the second cycle of the Macroeconomic Imbalance Procedure (MIP). The report calls for in-depth reviews of developments related to the accumulation and unwinding of macroeconomic imbalances in 14 EU Member States: Belgium, Bulgaria, Denmark, Spain, France, Italy, Cyprus, Hungary, Malta, the Netherlands, Slovenia, Finland, Sweden and the United Kingdom (see IP/12/1275, MEMO/12/912). For twelve of these countries, an in-depth analysis was already carried out in the first cycle of the procedure in spring 2012, and imbalances – of varying nature and severity – were found to exist. The countries concerned received policy guidance through the country-specific recommendations under the European Semester (see MEMO/12/388) in May 2012.
In the AMR, the Commission identified Member States whose macroeconomic situation needs further scrutiny through an in-depth review, the outcome of which is not pre-judged. Only after the in-depth reviews due to be published in March will the Commission conclude whether imbalances or excessive imbalances exist, and propose appropriate policy recommendations.
In general terms, the AMR presented positive signs that the adjustment of macroeconomic imbalances is progressing in both the EU and the euro area, mainly in the Member States with the largest imbalances, supported by gains in competitiveness and significant structural reforms.
6 Fiscal Sustainability Report 2013 (SOC)
Ministers are expected to welcome the Fiscal Sustainability Report 2012 which the Commission published on 18 December 2012 and to adopt related conclusions.
The report analyses the sustainability of public finances in the Member States. The deterioration in fiscal positions and increases in government debt since 2008, together with the budgetary pressures posed by population ageing as estimated in the 2012 Ageing Report (see MEMO/12/1001), compound each other and make fiscal sustainability an acute policy challenge. The report underlines that analysing prospective government debt developments and risks to fiscal sustainability is crucial at the current juncture for euro area countries and the EU to be able to formulate appropriate policy responses, of both fiscal and structural nature, and restore credibility and confidence. Securing fiscal sustainability requires strict adherence to the EU fiscal rules as well as implementing further structural reforms.
The Irish Presidency is due to update the Ministers on the current legislative proposals, which might include:
The Two-Pack (SOC)
Two draft Regulations, the so called "Two-Pack" (see MEMO/11/822), aim to further strengthen economic governance in the euro area including through pre-emptive country surveillance of national budgets and through providing the Commission with the possibility to impose enhanced surveillance on Member States likely to face or experiencing severe difficulties with regard to their financial stability.
The Irish Presidency will inform on the state-of-play on the legislative process. The Commission welcomes the progress made with the European Parliament and the Council in the "trilogues" to finalise the technical content of both draft proposals. This should facilitate a first reading agreement on the package in the near future. As Vice-President Olli Rehn recently said, the adoption of the Two-Pack is a necessary foundation for rebuilding the Economic and Monetary Union towards a genuine stability union of both responsibility and solidarity.
Banking Supervision Mechanism (SdR)
On 14 December 2012 the Council adopted a General Approach on the set of proposals for a single supervisory mechanism (SSM) for banks. Trilogues are progressing. The proposed new supervisory system with the ECB at its centre aims to strengthen the Economic and Monetary Union. The SSM is a first step towards a fully-fledged banking union as it was laid out in the Commission's Communication of 12 September 2012 and in the "Blueprint for a deep and genuine economic and monetary union" of 28 November 2012 (see (IP/12/953) and IP/12/1272).
Revised Capital Requirements rules (CRD IV) (SdR)
This legislative package strengthens the regulation of the banking sector. Trilogues are ongoing. The proposed package would replace the current Capital Requirements Directives (2006/48 and 2006/49) with a Directive and a Regulation that would constitute another major step towards creating a sounder and safer financial system, implementing the Basel III Agreement. The Directive governs the access to deposit-taking activities while the Regulation establishes the prudential requirements that institutions need to respect (see IP/11/915).
Markets in Financial Instruments Directive (MiFID) (SdR)
The package includes two legislative proposals, a Directive (MiFID) and a Regulation (MiFIR) (see IP/11/1219). The European Parliament voted both texts in Plenary in October 2012. The first Council Working Group meeting under the Irish Presidency took place on 5 February 2013; others will follow in the same month.
Market Abuse Directive (SdR)
A Council general approach was agreed last December on both the Regulation and the Criminal Sanctions Directive. The European Parliament adopted its first reading opinion on the two proposals in October 2012 in Committee, and took this Committee position as its mandate for the trilogues. Both the Council and Parliament positions incorporate the amended proposals of the Commission, adopted last July, (see IP/12/846) extending the Commission's original market abuse proposals to cover manipulation of benchmarks. The first trilogue on market abuse took place on 24 January 2013, and technical working groups on the Regulation will start on 7 February 2013 and continue in the course of the month.