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ECOFIN - 8 May 2007

Volume 461: debated on Monday 4 June 2007

The Economic and Financial Affairs Council was held on 8 May in Brussels. The UK was represented by the Economic Secretary to the Treasury. The items discussed were as follows:

Preliminary Draft of the 2008 General Budget

Commissioner Grybauskaite, responsible for financial planning and the budget, gave a presentation on the Commission’s preliminary draft 2008 EC budget. She emphasised that for the first time, spending on growth and employment policies will represent the highest share of the budget, ahead of agriculture and natural resources. Ministers noted the presentation of the preliminary draft budget.

Financial Markets

Hedge Funds

Ministers adopted conclusions on hedge funds, noting the role that hedge funds play in providing liquidity, helping markets price assets more accurately and driving financial innovation, but also that authorities should continue to remain vigilant with regard to any potential risks. The UK supported the conclusions, highlighting the need to ensure that any actions taken are proportionate, risk-based, and properly designed so that they achieve the intended outcomes. The financial services authority is responsible for regulating hedge fund managers in the UK and has put in place a rigorous regulatory framework to mitigate the risks associated with hedge fund activity.

White Paper on Asset Management

Ministers adopted conclusions on the Commission’s White Paper on enhancing the single market framework for investment funds. Commissioner McCreevy, responsible for the internal market and services, welcomed the endorsement by the Council of the Commission’s approach to this issue, as set out in its White Paper. The UK supported the conclusions and supports the Commission’s proposals for reform of the UCITS framework.

Ageing and Financial Markets

Ministers adopted conclusions on a Financial Services Committee report on the implications of ageing populations for financial markets. Ministers agreed on the importance for Finance Ministers and for the financial services industry of Europe’s ageing population, and commended the FSC report. The UK is focusing on pensions reform and is at the forefront of tackling a number of the issues the report raises, for instance through the provision of cost-efficient savings products as with stakeholder pensions, consideration of innovative ideas to encourage take up such as automatic enrolment and the need to strengthen the financial capability of consumers.

Inter-institutional Monitoring Group (IIMG): Second Interim Report Monitoring the Lamfalussy Process

Johnny Ackerholm, chair of the Inter-Institutional Monitoring Group on the Lamfalussy process, presented the group's interim report and said that the final report would be completed in October. Substantial progress had been made, and the UK looks forward to the final report.