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Volume 494: debated on Thursday 18 June 2009

The Economic and Financial Affairs Council was held in Luxembourg on 9 June 2009. The following items were discussed:

Economic and financial development

a) Update on current situation

The Council took stock of the current economic and financial situation, based on an update from the Commission and the ECB. Ministers were also informed by the Commission of its intentions regarding budgetary surveillance procedures in the light of the latest fiscal notifications by the member states. The Government believe that continued communication between member states is key to ensuring a co-ordinated response to the crisis.

b) International accounting standards

The Council held an exchange of views with representatives from the International Accounting Standards Board (IASB) regarding international standards used for the valuation of financial instruments. Ministers reiterated calls made at the informal ECOFIN in April for standard setters to work urgently to achieve clarity and consistency in the application of standards used for the valuation of assets in distressed and inactive markets. The Government welcome further actions announced by the IASB on 29 May, which demonstrate its commitment to respond to questions raised by the Commission and member states, and look forward to the EU advancing this work in the context of the G20 call to improve standards for valuation of financial instruments.

Preparation of the June European Council 18-19 June 2009

a) European supervisory framework

Ministers adopted Council conclusions on financial supervision and regulation to prepare the discussion at European Council. This follows the European Commission’s response to the De Larosière report. The Government are content with the final conclusions, which reflect the concerns expressed by the UK. The conclusions incorporate strong safeguards at the Government’s request, including the commitment that any new powers granted to existing or proposed bodies would not impinge in any way on member states’ fiscal responsibilities.

Following the discussion at European Council, the Commission will present all necessary proposals by early autumn 2009 at the latest, with the aim of having the new European financial supervision system, comprising both macro-prudential and micro-prudential components, fully in place in the course of 2010.

b) Implementation of the European Economic Recovery Plan

The Council endorsed a report to the June European Council reviewing progress made on the European economic recovery plan (EERP). The UK is broadly content with the final document, which is a horizontal view of the structural and fiscal measures taken by member states following from the EERP.

c) Bank reform schemes

Following on from an interim oral report given to Ministers at the informal ECOFIN in April, Ministers agreed a report on the effectiveness of support schemes undertaken to ensure financial stability, including reporting of the UK’s own asset protection scheme and other measures. The Government believe the report provides a useful insight into the actions taken by member states to support the financial sector. The Council has asked the Economic and Financial Committee to further examine requirements for bank restructuring in return for state support and the pricing of state guarantees, and to report back to the Council in July.

d) International financing of climate change

ECOFIN adopted Council conclusions to inform discussions by heads in June, in preparation of the December Copenhagen conference on climate change. The UK supports the Council conclusions, which demonstrate the EU’s commitment to tackling this issue ahead of the finalisation of the EU negotiation regarding finance mechanisms, which is expected in October.


a) Good governance in tax

Based on the Commission’s 28 April communication, ECOFIN adopted Council conclusions on further work relating to good governance in taxation. The conclusions encourage further work in relation to legislative proposals on the savings taxation directive, the administrative co-operation directive and the recovery directive, and urge the Commission to swiftly present the results of negotiations on an anti-fraud agreement with Liechtenstein. The UK is content with the conclusions, which represent a positive step forward on the three individual directives and on the wider good governance agenda, with its close links to the G20. The incoming Swedish presidency will report to the Council in the autumn on progress made.