ECOFIN (9 October 2007)

The Chancellor of the Exchequer (Mr. Alistair Darling)
The Economic and Financial Affairs Council was held on 9 October in Luxembourg. The Financial Secretary to the Treasury attended for the UK. The items on the agenda were as follows:

Implementation of the Stability and Growth Pact

Ministers adopted a Commission recommendation to abrogate the Excessive Deficit Procedure of the United Kingdom under Article 104(12) of the Treaty, and a recommendation for the Czech Republic to take further action in order to end their Excessive Deficit, in accordance with Article 104(7) of the Treaty.

The UK supports a prudent interpretation of the Stability and Growth Pact (SGP) which takes into account the level of debt, the influence of the cycle and the level of public investment. The UK Government welcome the abrogation of the UK EDP.

Public Finances in the EMU

Following their discussion at ECOFIN in July, Ministers agreed Conclusions on the Commission's annual Public Finances Report and accompanying proposals aimed at improving the effectiveness of the preventive arm of the Stability and Growth Pact by effectively applying the revised Stability and Growth Pact.

Quality of Public Finances

Ministers adopted Conclusions on the role that the modernisation of public administration can play in enhancing competitiveness, delivering better services, achieving better value for money and ensuring the control of government expenditure. This follows the discussion at the September Informal ECOFIN in Lisbon, at which the UK welcomed the sharing of experience between Member States.

Developments on the economic and financial situation

Ministers discussed the current economic situation and disturbances in global financial markets, and the possible policy responses to the issues raised. The UK is committed to pursuing an effective, considered global response to these global financial market issues, and believes the Financial Stability Forum provides the best route to pursue these aims.

Better Regulation

Ministers agreed Conclusions on better regulation and its role in improving EU competitiveness. The UK welcomes the calls for further progress to be made both at Member State and EU level towards reducing administrative burdens in the EU.

Flexicurity

Ministers agreed Conclusions on the economic aspects of flexicurity, which welcomed the Commission's work on developing an approach towards shared principles to develop labour market flexibility alongside support by social systems. The UK believes that fiscal sustainability is critical in the face of Europe's changing demographics.

Dialogues with third countries

The Commission presented Ministers with an update on its ongoing dialogues with third countries, including the USA, Japan, China, India and Russia, and focused on the economic, financial and regulatory aspects of the discussions.

Financial Service— Clearing and Settlement

Ministers agreed Conclusions on Clearing and Settlement, which covered the ECB's proposed Target 2 Securities project, the implementation and functioning of the Code of Conduct, progress on removal of the Giovannini barriers and the ESCB/CESR standards. These initiatives are intended to address deficiencies in the European Clearing and Settlement landscape—an area where the Council has long been pressing for change. The UK welcomes progress in improving the European Clearing and Settlement landscape.

Financial Services - EU arrangements for Financial Stability

Ministers agreed Conclusions on the long-running discussion of how to take forward EU arrangements for financial stability. The UK strongly supports efforts to improve financial stability arrangements, including financial crisis management arrangements in Europe, by ensuring all Member States have robust national crisis management arrangements, and welcomes improvements to cross-border communication and co-operation in financial crises.