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Volume 502: debated on Wednesday 16 December 2009

The Economic and Financial Affairs Council was held in Brussels on 2 December 2009. The following items were discussed:

Regulations establishing three European supervisory authorities

Ministers agreed general approaches on draft regulations establishing three European Supervisory Authorities (ESAs): the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority.

The UK secured significant additional safeguards for both crisis and mediation decision-making by the ESAs, including language in line with the June European Council conclusions that decisions taken would not impinge in any way on the fiscal responsibilities of member states.

Ministers agreed that ECOFIN would retain the power to call a crisis and therefore activate any ESA powers. Ministers will vote by simple majority on safeguard clauses applying to crisis powers of a member state seeking an opt-out as well as any ESA decisions on mediation. Member states seeking an opt-out would have the option to refer the matter to the European Council.

The Government welcome the outcome, which complements existing national regulation and should tighten up the European regulatory system. The presidency will now start negotiations with the European Parliament with a view to enabling adoption of the texts at first reading.


a) VAT: Draft Directive on reverse charge on emission allowances and certain goods.

The Council agreed a general approach on the draft directive that would allow member states to implement, on an optional and temporary basis, a reversal of liability for the payment of VAT on greenhouse gas emission allowances. The Council will continue to work on other elements of the proposal as regards the application of the reverse charge mechanism to mobile phones and electronic circuit devices, with a view to reaching an agreement as soon as possible.

b) VAT treatment of postal services

ECOFIN agreed to discuss the VAT treatment of postal services further before the implementation of the third postal directive enters into force on 1 January 2011 (1 January 2013 in some member states). The forthcoming Spanish and Belgian presidencies were invited to explore all options and report back to Council by December 2010 at the latest.

Implementation of the Stability and Growth Pact

ECOFIN agreed Council recommendations calling on Belgium and Italy to reduce their deficits below the 3 per cent. of GDP threshold by 2012, the Czech Republic, Germany, Spain, France, the Netherlands, Austria, Portugal, Slovakia and Slovenia to do so by 2013, Ireland by 2014 and the UK by the 2014-15 financial year. It also adopted a decision acknowledging that Greece’s response to its April 2009 recommendation has been insufficient. These recommendations are in line with recent agreements at ECOFIN and the European Council on the EU’s framework for fiscal exit strategies.

Preparations for the 10-11 December European Council

a) Financial supervision

The Council took stock of progress made on the legislative proposals aimed at reforming the EU framework for the supervision of financial services following the global financial crisis. The Swedish presidency will report on progress to the December European Council, taking into account the results of the Council deliberations on both the micro and macro-supervisory elements of the package, enabling Heads to sign off the complete package as planned.

b) Contribution from ECOFIN to the discussion on the post-2010 Lisbon agenda

Ministers agreed a set of conclusions on the direction of a successor to the Lisbon strategy. The Government support the conclusions, which help build momentum towards the December European Council, where EU Heads will discuss a set of principles for a new European strategy for jobs and growth.

c) Exit strategies

Ministers agreed conclusions on exit strategies from support to the financial sector. The UK is content with the conclusions, which recognise the importance of starting to design the strategy for the phasing out of support schemes, but emphasised that implementation should wait until markets have fully recovered. ECOFIN will return to this issue in February 2010.

Financial stability and crisis management

ECOFIN agreed conclusions on financial stability, focusing on improvements in cross-border crisis management in the banking sector. The conclusions recognised the value of co-ordination among member states and with external partners, and endorsed the principles of firm-specific recovery and resolution plans.