The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council was held in Brussels on 13 July 2010. The following items were discussed:
EU financial supervision
ECOFIN agreed a revised position on the Commission’s proposals to establish a European Systemic Risk Board and three new European Supervisory Authorities. The Council:
Reaffirmed its December 2009 agreement that supervision should remain national, that the proposed EU roles in mediation and crisis should be subject to safeguards to protect member states fiscal responsibilities, and that EU direct powers over firms should not override national supervisors’ discretionary decisions.
Rejected demands by the European Parliament (EP) for an EU resolution fund and EU supervision of cross-border firms.
Reaffirmed that the European Banking Authority will be based in London.
Sought to limit and tie down the role suggested by the EP for the European Supervisory Authorities in banning products. As a result, the Council agreed that such powers would:
be specifically agreed by Council and EP in legislative proposals;
be subject to a sunset to require the authority to regularly reaffirm its decision;
include an appeal procedure requiring a qualified-majority vote to support a ban if a member state requests it.
The presidency will now take forward negotiations on the basis of the new mandate, and will seek to find agreement ahead of the September EP plenary vote. The UK supports this new ECOFIN consensus, and looks forward to a swift agreement with the EP and the establishment of the bodies by January 2011.
Programme of the Belgian Presidency
The Belgian presidency presented the ECOFIN work programme for the next six months.
Follow up to the European Council:
Commission communication on “Reinforcing economic policy co-ordination”
The Commission presented its paper as a contribution to the ongoing work on economic governance. The UK believes the paper provides helpful input and agrees that robust national frameworks are an important part of the solution—independence of national statistical and fiscal authorities is key, as shown by the creation of the Office for Budget Responsibility. Further work will continue by the European Commission, with ECOFIN returning to this issue in September.
Broad Economic Policy Guidelines
Following initial agreement at ECOFIN and the European Council in June, the broad economic policy guidelines (BEPGs) were formally adopted. The Government are content with the text, following additional language at the June European Council making clear that country-specific recommendations under the BEPGs
“shall be fully in line with relevant treaty provisions and EU rules and shall not alter member states’ competences, for example in areas such as education”.
Stability and Growth Pact
The Council adopted a raft of decisions on excessive deficits including launching excessive deficit procedures for Bulgaria, Denmark, Cyprus and Finland. In addition, the Council noted that since December 2009, effective action has been taken by Austria, Belgium, the Czech Republic, Germany, Spain, France, Ireland, Italy, the Netherlands, Portugal, Slovakia and Slovenia. Following the emergency Budget on 22 June, ECOFIN agreed that the UK is also now taking effective action to further increase the size of fiscal consolidation in 2010-11 and significantly strengthen the planned pace of deficit reduction over the medium-term.
Adoption of the euro by Estonia
Following discussions at the June ECOFIN and European Council, euro-area member states voted to adopt regulations which confirm the introduction of the euro in Estonia on 1 January 2011.
AOB: Report on EMU public finances
The annual report on public finances in the European Monetary Union was presented to Ministers. The report covers consolidation strategies and the link between macroeconomic imbalances and fiscal policy.