22nd Sep 2023

EU ministers draft finance chapter of spring summit

  • The US administration's position at the London G20 gathering on 2 April will likely determine the meeting's outcome. (Photo: EUobserver)

EU finance ministers will meet in Brussels on Tuesday (10 March) to prepare a number of key policy documents for agreement by EU leaders who will gather for a summit on 19-20 March.

Chief amongst these will be a "key issues paper" outlining a list of measures to be taken this year to tackle the financial crisis and economic slowdown.

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Ministers will debate the proposals for increased financial regulation published by a high-level group of experts headed by former IMF managing director, Jacques de Larosiere.

The Larosiere report calls for a European Risk Council to be set up under the auspices of the ECB, designed to gather information on the systemic risks facing the EU economy and financial sector. It also calls for tough new powers to be handed to the existing committees that oversee national regulation of individual banks.

The flurry of recent meetings between European leaders, including an informal meeting of EU G20 heads of state and government in Berlin last month, is partially due to their desire to present a unified voice at the upcoming G20 meeting of world leaders in London on 2 April.

On Tuesday EU finance ministers will discuss the "terms of reference" for the EU's representatives at the important meeting, with topics likely to include offshore banking centres, regulation of hedge funds and the future role of the IMF.

The London meeting on 2 April will be the second of its kind after leaders from industrialised and developing nations met in Washington last November in a frantic bid to restore economic confidence and stability following the breakout of the financial crisis last autumn.

Also on Tuesday, finance ministers will discuss member state stability and convergence programmes submitted by governments to the commission in January. The plans outline government spending programmes and expected tax receipts for the coming years.

The topic is likely to dominate a meeting of eurozone finance ministers the evening before (Monday, 9 March) as concerns mount over rising budget deficits and potential difficulties meeting debt repayments.

Ministers may discuss the possibility of one member state coming to the rescue of another member state and also the idea of a common "eurobond" for members of the group sharing the euro currency.

Several countries feel the creation of a eurobond would reduce their borrowing costs but the idea faces considerable opposition from Germany and the Netherlands who fear the reverse scenario would apply to them.

Following this week's discussion, finance ministers from the EU27 will decide next month whether the commission should start excessive deficit procedures against a number of member states.

In December, EU leaders asked finance ministers to reach agreement by March on measures to reduce Valued Added Tax in certain sectors as part of European Economic Recovery Plan.

Accordingly, ministers will likely agree to an extension of reduced VAT rates in areas deemed to be labour intensive such as the housing construction sector, hairdressing, caring and private cleaning sectors.

Tuesday's council meeting will also discuss the future financing of measures to combat climate change and are likely to adopt conclusions to be submitted to the European council on 19-20 March.

A United Nations convention will be held in December in Copenhagen to secure a new global agreement on climate change as the current framework, the Kyoto protocol, is due to expire in 2012.

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