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ECOFIN

Volume 488: debated on Monday 23 February 2009

The Economic and Financial Affairs Council was held in Brussels on 10 February 2009. The following items were discussed:

Preparation of the meeting of the European Council

a) European economic recovery plan

Ministers held a debate on the current state of implementation of the European economic recovery plan (EERP), including a first horizontal evaluation report from the European Commission. The Government are a firm supporter of the timely, targeted and temporary measures taken at national level under the framework of the EERP to stimulate growth in the EU.

ECOFIN exchanged views on the financial aspects of the Commission’s proposals for energy and broadband projects to be funded through the EU budget. The Government will continue to scrutinise the Commission’s proposals in detail.

b) Key issues paper

ECOFIN held an orientation debate on the “key issues paper” on economic and financial issues for the Spring 2009 European Council. The full version of the paper will be agreed before the European Council based on the outline proposed by the presidency. The Government supported the outline, which emphasises the serious challenges in 2009, and the remaining need for action to stabilise financial markets and facilitate a speedy economic recovery.

c) Reduced rates of VAT

Following a political discussion by Ministers, the presidency indicated it that it would reflect on how to take the dossier forward in response to the European Council’s request to settle the issue by March. A further discussion is expected at the ECOFIN meeting on 10 March, in the run-up to the next European Council, on 19 and 20 March. The Government continue to believe that member states should be allowed the flexibility to apply reduced rates of VAT where they do not materially affect the functioning of the single market.

General budget of the EU: Discharge procedure in respect of the implementation of the budget for 2007

ECOFIN adopted a recommendation to the European Parliament on the discharge to be given to the Commission for implementation of the EU general budget for 2007. The UK welcomes the references within the recommendation relating to the key role of member states in improving financial management and accountability of EU funds under shared management.

Other business

Short selling

The Council took note of an intervention by the Dutch Minister calling for work to enhance greater co-ordination between member states and at international level on temporary measures aimed at short selling. The Commission and the Committee of European Securities Regulators (CESR) will look further into these issues, which the UK welcomes in the wider context of effort to improve corporate governance.

Breakfast meeting on the economic situation

Ministers discussed the implementation of financial rescue packages. They agreed that the priority is to fully restore the functioning of credit channels, and on that basis agreed to a set of lines of communication. ECOFIN agreed that, to safeguard banking sector stability, measures to deal with impaired assets could usefully complement agreed instruments, consistent with principles set in October 2008. ECOFIN will continue to monitor this issue closely. The UK fully supports these measures and the ECOFIN lines of communication as the basis of a flexible, co-ordinated European response to the financial situation.