The Economic and Financial Affairs Council was held in Brussels on 4 March 2008. The Chief Secretary to the Treasury attended for the UK. Items on the agenda were as follows:
Implementation of the Stability and Growth Pact. Stability and Convergence Programmes: Second series of Member States
Ministers adopted Council opinions on the stability programmes of Austria, Spain, Ireland, Portugal, Greece, Malta, Cyprus, Slovenia, and on the convergence programmes of the Czech Republic, Bulgaria, Estonia, Latvia, Denmark, and Lithuania. The UK supports a prudent interpretation of the Stability and Growth Pact (SGP) which takes into account the economic cycle, sustainability and the important role of public investment.
Preparation of the European Council (13-14 March)
i) Broad Economic Policy Guidelines 2008-10/11 and Country-Specific Integrated Recommendations
Following the orientation debate on these documents at the January ECOFIN and further drafting amendments in the Economic Policy Committee and Economic and Financial Committee, Ministers adopted reports which were sent to the spring 2008 European Council. These reports included reformulated draft texts which were endorsed by Heads as part of the launch of the next three-year cycle of the Lisbon strategy. The UK believes that implementation of the Lisbon strategy, including these recommendations, should now be a priority for member states.
ii) Financial stability
Ministers prepared the spring European Council’s discussion on issues related to financial stability on the basis of a report drafted by the Economic and Financial Committee which examined the causes and possible policy responses to recent financial market turbulence, preparing a contribution for Heads of State and Government on the matter. Ministers agreed that key issues for discussion were: improving transparency, valuation of financial products, strengthening prudential requirements and making markets function better. The UK believes that as a key global marketplace, EU has an important role to play in the international response to market turbulence.
iii) Sovereign wealth funds
Ministers prepared the spring European Council’s discussion on Sovereign Wealth Funds, following the publication of a communication by the European Commission on the framework for investments made by Sovereign Wealth Funds. The UK welcomes the Commission’s recognition of the benefits of open trade and investment.
General Budget of the European Union—Council priorities for the 2009 budget
Ministers adopted conclusions agreeing the Council’s budget guidelines for the 2009 EC budget. These guidelines are a set of broad principles which are designed to inform the subsequent and more detailed discussions on the level of appropriations required for the different areas of the budget. The subsequent negotiations throughout 2008 will determine the amounts to be spent under each budget heading. The UK supports the conclusions, which place appropriate emphasis on maintaining budget discipline and sound financial management.
Fight against tax fraud
At the March ECOFIN, Ministers had an initial discussion of a Commission Communication on far-reaching changes to the VAT system to help counter fraud. The issue will be re-examined at a future meeting. The UK is strongly supportive of work that will help in the fight against Missing Trader Intra-Community (MTIC) and other VAT fraud, while remaining committed to minimising the burdens on legitimate businesses.
Taxation of savings
The European Commission updated ECOFIN on its discussions with Singapore, Hong Kong and Macao with a view to bringing them into the framework of the Savings Directive. The Savings Directive enshrines the principle of exchange of information on taxation of savings and extends beyond the EU through agreements with third countries and territories. The UK strongly supports the Commission’s continued dialogue with these financial centres.
Ministers also discussed the problem of cross-border tax evasion in the context of recent developments concerning Liechtenstein. The Commission offered to bring forward its report on the operation of the Savings Directive and Ministers welcomed this. The EU has an important role to play in combating tax evasion and the Savings Directive is a key instrument in promoting transparency.