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ECOFIN

Volume 542: debated on Monday 12 March 2012

The Economic and Financial Affairs Council will be held in Brussels on 13 March 2012. The following items are on the agenda to be discussed:

Financial transaction tax (FTT)

The presidency will update Ministers on the state of play of discussions on the financial transaction tax, and in particular the technical work that is being undertaken on this file. Ministers will then exchange views. The Chancellor has made it clear on a number of occasions that the UK does not support the Commission’s recent proposal for an FTT. As it stands, the proposal will have significant negative impacts on jobs and growth. To avoid a damaging relocation of financial trading, FTTs would need to apply in all financial centres, and not just the EU.

Alert Mechanism Report (AMR)

Ministers will be asked to agree to Council conclusions on the AMR and hold an exchange of views. The AMR is based on a “scoreboard”, where each member state is assessed against 10 macroeconomic indicators, and an accompanying analysis. These are designed to indicate where potential external and internal imbalances may exist. The UK exceeds the threshold values on four indicators: real effective exchange rate, export market share, private sector debt and public sector debt.

The Commission will then conduct in-depth reviews on 12 member states, to assess whether imbalances or excessive imbalances exist. These member states are: the UK, Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Hungary, Italy, Slovenia, Spain and Sweden. These reviews will be published in May. Greece, Ireland and Portugal and Romania are already under enhanced economic surveillance as part of their payment assistance programmes and are therefore not subject to in-depth reviews.

The Government support the macroeconomic imbalances procedure, on which the AMR is based. They are taking determined action to rebalance the UK economy and ensure a return to sustainable growth, including through: tough and credible action to tackle the deficit; a new strategy to increase house building and stabilise the housing market; and boosting exports and rebalancing the economy towards regional growth.

(Possible) Follow-up to the European Council on 1-2 March 2012

The presidency may inform Ministers on the follow-up to the March European Council conclusions. Ministers will then exchange views. On growth, the Council conclusions set out an appropriate time line for addressing the EU-level growth agenda, in line with the Prime Minister’s letter with 11 other member states. The Government are content with the Council conclusions. The intergovernmental treaty was signed by 25 member states in the margins of European Council. The Government welcome the signing of the treaty: it is in the UK’s interest for the euro area economies to achieve stability and growth, and for the treaty to work to achieve this.

Follow-up to the G20 Meeting of Finance Ministers and Governors on 25-26 February 2012 in Mexico

The Commission will debrief Ministers on the main outcomes of the G20 Finance Ministers’ and Central Bank Governors’ meeting in Mexico City on 25 and 26 February. The main items on the agenda were the global economy and framework for growth, IMF resources, financial regulation and commodities. The issue of IMF resources dominated the discussion, and the G20 agreed that euro area countries will reassess the strength of their support facilities in March. This will provide essential input into the G20’s ongoing consideration to mobilise resources to the IMF. At the G20, the Chancellor stressed that IMF resources to support individual countries cannot be a substitute for further credible steps by the euro area to support their currency. The next G20 Finance Ministers’ meeting will be in the margins of the IMF spring meetings in Washington.

Implementation of the Stability and Growth Pact

Following the Council decision on 24 January that Hungary has taken no effective action to sustainably correct its excessive deficit, the Commission has proposed that the Council suspend €495 million of cohesion fund (CF) commitments to Hungary in 2013. Ministers will be invited to adopt the Council decision. The suspension of CF commitments to Hungary represents 0.5% GDP and 29% of total CF commitments for the year. The Commission believes this to be both an effective and proportionate amount. The UK will not oppose the Commission’s proposal.

Information on the informal ECOFIN on 30-31 March 2012

The presidency will inform delegations about the informal ECOFIN which will be held in Copenhagen on 30 and 31 March.

ECOFIN Breakfast

Eurogroup will be meeting on 12 March. Ministers will be debriefed on the Eurogroup discussions, before formal ECOFIN starts. Ministers are likely to discuss the economic situation. Ministers may also discuss the issue of the next president of the European Bank for Reconstruction and Development. The UK supports the need for an open and transparent process in selecting the president.