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ECOFIN (10 March)

Volume 489: debated on Tuesday 17 March 2009

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

Implementation of the Stability and Growth PactStability and Convergence programmes

The Commission presented its views on the stability or convergence programmes submitted by 21 member states under the terms of the Stability and Growth Pact. Ministers agreed Council opinions on all 21 programmes, and stressed the importance of ensuring fiscal stimuli remained temporary, timely and targeted. The UK supports a prudent interpretation of the stability and growth pact which takes into account the economic cycle, sustainability and the important role of public investment.

Preparation of the Spring European Council

a) Key Issues Paper

ECOFIN adopted the key issues paper, which will be put forward at the Spring European Council on 19 and 20 March. The paper focuses on the challenges facing the EU in 2009, the need for short-term action to stabilise the economy and long-term measures to prevent recurrence. The UK supports the paper and particularly welcomes the assurances from the European Investment Bank about its lending for the automotive industry.

b) Common messages to the G20 summit

Ministers discussed the EU common messages to feed into the London G20 summit. Discussion centred on the presidency’s proposed terms of reference, which were endorsed by the Council. The Government welcome the EU’s participation in a meeting of G20 Finance Ministers on 14 March that will prepare the London G20 summit’s discussions of the macro-financial response to the downturn, the reform of the international financial institutions and how to reshape the global financial regulatory system.

c) Country-Specific Integrated Recommendations

ECOFIN approved a report to the European Council regarding broad guidelines for economic policy. The report focuses on country-specific integrated recommendations to be made to individual member states within the framework of the European economic recovery plan. The UK believes that in the current economic climate the implementation of the Lisbon strategy, including these recommendations, should be a priority for member states.

d) Reduced VAT rates

Ministers discussed reduced rates of VAT and reached political agreement on a limited number of changes to Directive 2006/112/EC, allowing member states greater flexibility to apply reduced VAT rates to certain supplies of goods and services. The Council also declared its full support for the prolongation for another two years of the UK’s targeted reverse charge derogation aimed at combating intra-community VAT fraud. The UK welcomes the outcome of these discussions.

e) International financing of climate change

The Council discussed and agreed conclusions to form part of the EU’s overall strategic approach to global climate negotiations in Copenhagen in December 2009. The UK welcomes the conclusions, which demonstrate the Council’s commitment to tackling this issue.

General budget of the European UnionCouncil priorities for the 2010 budget

ECOFIN adopted Council conclusions on its budgetary priorities for the EU financial year 2010. The Commission welcomed the conclusions, highlighting the importance of sound financial management, effective forecasting and good budget implementation as the guiding principles for the budget. ECOFIN will revisit the subject in June, after the Commission’s publication of the preliminary draft budget in May.

Other business

Convention on centralised customs clearance

Member states completed the signature of a convention on centralised customs clearance concerning the allocation of national collection costs retained when traditional own resources are made available from the EU budget. The Government welcome this step.