The European Finance Ministers are meeting on Friday 5 and Saturday 6 April for an informal, forward-looking meeting in Bucharest. They will discuss future institutional priorities, the future of the Capital Markets Union, but also the multiannual financial framework (MFF) 2021-2027, the challenges of workforce mobility in the EU, as well as the role of taxation in supporting economic growth. Brexit could also be included in the discussions.
Future priorities. On Friday, Ministers, joined by central bank governors, will discuss future institutional priorities.
The role of this policy debate is “to reach a consensus on the way forward to meet the needs for growth and convergence in the European Union”, says the Romanian Presidency of the Council of the EU, in a note referred to by EUROPE.
It considers that the specific context in which its presidency is taking place, namely the European elections in May, the negotiations on the MFF, a period of economic transformation, but also of growing global uncertainty, represents “a good time for a forward-looking ministerial discussion”.
The discussions will be based on a study by the Bruegel Institute which identifies the following priorities for the European agenda over the next five years: innovation, climate change, improving social cohesion, along with convergence in the EU, as well as strengthening relations between countries inside and outside the euro zone.
The discussions will also be informed by an issues note from the Economic and Financial Committee of the Council of the EU. This note focuses on restoring flexibility for counter-cyclical macroeconomic policy measures, strengthening the Economic and Monetary Union, reforming the economic governance framework and taking into account economic, social and environmental sustainability needs.
Ministers will thus be invited to exchange their views on the priorities identified in the various documents. In particular, they will identify the main challenges in terms of convergence and social cohesion and discuss the need for additional instruments to address these challenges.
However, according to a diplomatic source, it is not necessary to wait for an official statement setting out a list of priorities, as first and foremost the idea is to give political impetus.
CMU. Ministers will then focus on taking stock of achievements within the framework of the Capital Markets Union (CMU) and defining the way forward.
According to a European source, this discussion will be an opportunity for Romania to list all the interinstitutional agreements that have taken place under its presidency of the Council of the EU, and for the Commission to send a message to the Member States on issues that have not yet been finalised, such as the European taxonomy (see EUROPE 12212/9) or the regulation on participatory financing (see EUROPE 12130/3).
“Are European capital markets and the banking sector better equipped today than in 2008 to potentially deal with a new financial crisis?" This will be one of the questions that will structure the ministerial debate. Other parameters will also be discussed, such as sources of financing and the transition to a green economy.
MFF. Over lunch, Ministers will discuss elements of the multiannual financial framework of relevance to the ECOFIN Council, such as the link with the budgetary process of the 'European Semester' and the financing of the EU budget, on the basis of a note from the Romanian Presidency.
According to a diplomatic source, the informal format of the meeting will allow for a “more open” discussion, which should reveal very divided opinions.
Workforce mobility. On Saturday, Ministers will discuss the impact of workforce mobility in the EU on Member States' public finances.
The discussions will be based on a study by the CEPS think tank which describes both the positive and negative effects that workforce mobility can have on the economy. The study also identifies the different drivers of workforce mobility, including the wage gap.
In a note referred to by EUROPE, the Romanian Presidency, which has decided to include this item on the agenda, identifies the “brain drain” as one of the main challenges to be addressed. This leakage can contribute to slowing growth and income convergence, it said.
Ministers will discuss the different ways to address this problem. In this note, the Presidency considers that several measures can be implemented at national level to remedy this situation, but that European policies can also play an important role in ensuring convergence with a moderating effect on this phenomenon.
Taxation. On Saturday, the EU's finance ministers will then debate the role of taxation in supporting economic growth, on the basis of a working document produced by the Commission.
This document sets out a common vision for the EU's future tax policies, which could be structured around the following three pillars: - promoting the EU's competitiveness and productivity while ensuring fair tax competition; - moving to a greener economy while supporting vulnerable businesses and citizens; and - ensuring the sustainability of tax revenues while preserving national tax policy choices.
The document identifies actions that could be taken at Member State and EU-level. It should be noted that it still identifies unanimity as a major obstacle to decision-making in the Council, referring to the Commission's statement on a gradual lifting of the unanimous vote of Member States on tax issues (see EUROPE 12172/22).
BREXIT. The United Kingdom's exit from the EU is not officially on the ministerial agenda. But a diplomatic source considered it very likely that discussions would take place at the same time on Thursday, 4 April.
For another source, it would indeed be "strange” if this subject, which appears to be “at the forefront of everyone's minds”, were not to be included in the discussions. According to her, the Ministers could discuss the current situation of uncertainty and especially “everyone's preparations in the event of a 'dry run'”.
G20. Finally, Ministers are expected to endorse, without discussion, the position of EU countries attending the G20 Finance meeting in Washington on 11 and 12 April.
According to the preparatory document, Europeans are aware of the global economic slowdown and advocate maintaining an open economy based on multilateral rules.
“We must give the highest priority to finding global solutions to the taxation of the digital economy” by 2020, the text stresses. And called for intensified work on tax transparency in three ways: - mandatory reporting by tax intermediaries; - updating the OECD list of non-cooperative tax jurisdictions; - close monitoring of compliance with commitments made to erode the tax base and to exchange information automatically. (Original version in French by Marion Fontana)