Brussels, 13/01/2016 (Agence Europe) - On Friday 15 January, the European finance ministers will discuss the 'European Semester' budgetary process, and Czech plans to set in place a broad reverse charge system for value-added tax.
In the 2016 exercise of the 'European Semester', the Council will adopt conclusions on the annual growth review and macro-economic imbalances in the EU (see EUROPE 11439). It supports the economic policy priorities laid down by the European Commission in late November 2015, which are: boosting investment, continuing structural reforms and responsible budgetary policies. In its autumn economic forecasts, the Commission predicted growth of 1.8% of GDP in the eurozone in 2016 (1.6% in 2015) and of 2.0% in the EU of 28 (1.9% in 2015).
On the macro-economic imbalances, the Commission will publish detailed analyses in February regarding 18 member states (see EUROPE 11439). It states that the imbalances observed in Bulgaria, France, Croatia, Italy and Portugal will require decisive actions and specific monitoring. For Belgium, Germany, Spain, Finland, Hungary, Ireland, the Netherlands, Romania, Slovenia, Sweden and the United Kingdom, differentiated action is required. For the first time, Estonia and Austria are also in the firing line.
The ministers are expected broadly to subscribe to the Commission's analysis. According to draft conclusions of which EUROPE has had sight, they support the “major challenges” which subsist, in particular “high levels of indebtedness, high unemployment and decreasing growth and productivity potential trajectories”. Even so, the Council “regrets the fact that the Commission has included three indicators for employment” (activity rate, long-term unemployment and youth unemployment) in the scoreboard of indicators used to study macro-economic imbalances, according to the draft conclusions, which add: “the social and employment market-related indicators are not relevant to identify macro-economic risks and the developments of these indicators would not trigger new steps under the macro-economic imbalance procedure”.
The ministers will also approve the draft specific recommendation for the eurozone announced by the Commission in late November. This text recommends a globally neutral budgetary orientation for 2016, a reduction of public debt in 2017, the continuation of the employment and services markets reforms, the gradual reduction of non-performing bank loans and improving insolvency procedures for businesses and households. This is the first time that this draft recommendation has been brought forward so that the Nineteen can take account of it in the application of their macro-economic policies.
VAT. By request of the Czech Republic, the Commission will discuss the prevention of value-added tax fraud by means of a reverse charge mechanism. As Prague wishes to make use of this instrument on a broader scale, the ministers will discuss the potential impact of such a measure on cross-border trade. The discussion will feed into the reflection of the Commission, which is to present a communication on the future VAT system in March. The Council could equally ask it to address the prevention of VAT fraud in that context.
The Ecofin Council may also discuss the fight against the financing of terrorism. France, which has been hit by this phenomenon, wants to step up controls on electronic currency and speed up the application of the fourth directive (849/2015) against money laundering and the financing of terrorism, which is scheduled for 2017 (see EUROPE 11447 and 11446).
Lastly, the Dutch Presidency of the Council of the EU will present its working programme for the first half of 2016 for economic and financial matters. The dossiers on which it hopes to make progress include: banking union in the eurozone through the creation of a European deposit insurance scheme (see EUROPE 11448), the optimisation of Economic and Monetary Union (EMU) and the fight against tax evasion and tax fraud.
It is also worth noting that by request of Germany, the ministers will hold a discussion over breakfast on the financing of the EU/Turkey action plan to stem migratory flows into the EU, which will have an envelope of €3 billion. (Original version in French by Mathieu Bion with Elodie Lamer)