The Economic and Financial Affairs Council was held in Luxembourg on 8 June 2010. The Financial Secretary to the Treasury represented the UK.

A-points

Council agreed legislative A-points on VAT administrative co-operation regulation, regulation on the quality of statistics, and the European Investment Bank (EIB) external lending mandate. Given that Parliament has not had the opportunity to clear these documents, the Government abstained on these items at ECOFIN and entered a statement to the minutes to that effect.

Convergence reports and enlargement of the euro-area

The Council took note of reports from the Commission and the European Central Bank on the fulfilment of economic and monetary union (EMU) convergence criteria by the nine non-euro area member states with an EMU derogation. It also noted a proposal for a Council decision aimed at enabling Estonia to adopt the euro as its currency on 1 January 2011, following positive signals that it has met the entry criteria. The final decision will be taken at the July ECOFIN.

Stability and Growth Pact

The Council adopted an opinion on an update by Cyprus of its stability programme. There were also discussions following announcements from Spain and Portugal of their fiscal consolidation measures. Ministers from several member states updated the Council on their domestic austerity measures. The Government outlined the savings package of £6.24 billion for financial year 2010-11 announced on 24 May.

Preparation of the 17 June European Council

a) Broad economic policy guidelines

Ministers approved a report to the European Council on the broad economic policy guidelines for Member States and the EU as a whole. The treaty on the functioning of the EU provides that member states are to regard their economic policies and promoting employment as matters of common concern and co-ordinate them within the Council. As these have not had a chance to complete scrutiny, the UK abstained, and the Government made clear they reserved their position on some aspects of the substance of the proposals. The guidelines will go for discussion at the 17 June European Council before returning to ECOFIN for formal adoption in July.

b) Europe 2020 Strategy

ECOFIN agreed conclusions on the Europe 2020 strategy to feed in to discussions at the European Council. The conclusions cover proposed headline targets for the strategy; the broad economic policy guidelines; national bottlenecks to growth; and enhanced economic policy co-ordination and timing. The Government will continue to encourage a focus on specific, meaningful steps the EU could take to promote growth.

c) Progress report on financial reform

ECOFIN discussed a progress report on financial reform to the European Council covering crisis management (including levies and funds), financial supervision, credit rating agencies, derivatives and financial exit strategies. The Government outlined their priorities for the reform of European regulation of financial services and the need to ensure international consistency and pursue non-discriminatory policies. The Council will now work with the Commission to take forward the ambitious programme it has proposed.

d) Fiscal exit strategies

The Council approved a report to the European Council on progress made in the development of an exit strategy for the unwinding of budgetary stimulus measures introduced in response to the economic crisis. The Government support the strategy, which is in line with announced plans for an additional £6.24 billion spending cuts in the UK.

e) Preparation for the G20 Summit

Ministers prepared an EU position for the June G20 summit in Toronto, where Presidents Van Rompuy and Barroso will represent the EU. The Government supported the agreed terms of reference, which reflect the agreements reached at the 5 June G20 finance ministerial in Korea. The final position will be adopted by the European Council.