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Out of the crisis, boosting growth: EU’s finance and economy ministers adopt recommendations for all 27 EU member states

21-06-2012 16:09:00

Minister for Economic Affairs and the Interior Margrethe Vestager and Member of the European Commission Algirdas Semeta. Tomorrow's ECOFIN meeting will be the last during the Danish Presidency.

Photo: Council of the European Union
vestager ecofin

EU’s economy and finance ministers will meet for the last time with Margrethe Vestager as chair of the ECOFIN Council on 22 June 2012. By 1 July Cyprus takes over the EU presidency. The ministers will adopt opinions and country-specific recommendations for all 27 EU member states regarding sound economic policy and economic reforms that will help bring Europe out of the crisis and boosting growth and job creation. The ministers will also discuss possible ways forward with respect to a tax on financial transactions. The ministers are also expected to abrogate the recommendations for Bulgaria and Germany who have brought their government deficit below 3 per cent of GDP and to lift the suspension of Cohesion Fund commitments for Hungary.

As part of the strengthened economic cooperation in the EU, ECOFIN will on 22 June adopt opinions and country-specific recommendations for all 27 EU member states based on the countries’ plans for economic policy in their stability and convergence programs and national reform programs. The purpose of the recommendations is to identify key economic challenges in the individual countries, including ensuring sound fiscal policies, structural reforms that ensure flexible labor markets etc., and initiatives that address economic imbalances such as competiveness and balance of payments problems. The European Council is expected to endorse the recommendations at the EU Summit on 28-29 June. This will mark the end of this year’s so-called European Semester – the framework for the EU countries’ economic cooperation - the first European Semester after the entry into force of the new rules of the reformed economic governance.

Minister for Economic Affairs and the Interior Margrethe Vestager says:

”We work hard to recover from the economic crisis and to create growth and employment. We have agreed on recommendations on our economic policies. They focus on the key challenges in each individual country. In light of these challenges, it is crucial that each country delivers concrete measures that are needed to address these challenges. First and foremost it is about getting the public finances in order and adopting reforms that strengthen the labour markets and thereby job creation. At the same time, it is important to implement measures to address economic imbalances such as competiveness problems etc. It is imperative to get the economic crisis under control and restore growth and employment. We discuss our challenges together as the crisis has shown that economic policies in one country affect developments in the other countries”.

At the meeting, the ministers will also discuss the Commission’s proposal to amend the EU’s energy taxation directive which aims to promote the ambitious climate and energy targets of the EU. The proposal implies that the taxation of the different energy products depends on both their energy content and their CO2 emissions. The goal of the discussion at the meeting is to establish guidelines for the work going forward.

Margrethe Vestager says:

”’We are very ambitious when it comes to the EU’s climate and energy targets and higher common energy taxation is an effective way to go. I therefore hope for a constructive debate that can bring the file forward although opinions differ widely”.

The ministers will also discuss possible ways forward for a tax on financial transactions on the basis of the Commission’s proposal. The discussions are once again expected to reflect the very difficult negotiation situation and are therefore not expected to lead to conclusions, but the aim is to obtain guidelines for further work.

The ministers are expected to adopt a decision to abrogate the excessive deficit procedures for Bulgaria and Germany as both countries have complied with their recommendations to consolidate their public finances and bring their deficits below 3 per cent of GDP. The ministers are also expected to lift the partial suspension of Cohesion Fund commitments for Hungary which was adopted at the Council meeting 13 March this year. The Commission proposes to lift the suspension because the preliminarily assessment is that Hungary has taken steps in accordance with its new recommendation to bring the deficit below 3 per cent of GDP.

Margrethe Vestager says:

”We are still struggling with the debt crisis but there are also success stories of countries that have effectively reduced their deficits or are back on track towards sounder fiscal policies. Hungary is now starting to take the necessary steps. This indicates that the Council’s decision earlier this year on a partial suspension of EU funds for Hungary created the right incentives for Hungary to implement the necessary budgetary improvements. The decisions today show that the countries are working hard to comply with the strengthened rules of economic governance so that we can recover from the crisis and get growth going again.”

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