The Portuguese Finance Minister, João Leão, indicated on Friday, 8 January, that discussions on the continuation of the freezing of the Stability and Growth Pact in 2022 will take place in the second quarter of this year.
“The current situation is too uncertain: we are in the middle of the second pandemic wave in Europe. (...) We must avoid withdrawing too quickly the budgetary measures that support growth”, he said, when presenting the priorities of the Portuguese Presidency of the Council of the EU.
For the first time in EU history, European fiscal rules were suspended in spring 2020 after the outbreak of the Covid-19 pandemic, and this freeze will continue in 2021. The draft recommendation on fiscal policy for the euro area calls for an expansive fiscal stance to enable Member States to cope with emergency health and economic spending.
Mr Leão also referred to the medium-term reform of the Stability Pact, advocating “simpler, more transparent” rules that are better aligned with monetary policy. However, the Next Generation EU European Recovery Plan needs to be put into practice as a matter of urgency, and this will require the approval of national plans in the spring (see EUROPE 12629/5).
Furthermore, the minister confirmed Portugal's willingness to deepen the Capital Markets Union (CMU), in order to help sustain the economic recovery.
Lisbon will pay particular attention to the new sustainable finance strategy and the digital finance package presented in September (see EUROPE 12567/2).
The Portuguese Presidency will also have to manage the process of appointment by the EU Council of the future Chair of the European Securities and Markets Authority (ESMA). Three candidates were shortlisted, including Maria Luís Albuquerque, former Finance Minister of Portugal (see EUROPE 12610/35).
Mr Leão confirmed that the selection process was on track and that the examination would now be narrowed down to two candidates, who are the most likely to reach consensus, without however revealing whether the Portuguese candidate was one of them.
Hope for an agreement on digital taxation
In the fiscal area, the major issue of the Portuguese Presidency will be digital taxation (see EUROPE 12579/21).
“The Portuguese Presidency will focus its intention on reaching a global consensus at the OECD. But we also support the German presidency decision to ask the European Commission to engage in relevant preparatory work to address the tax challenge of the digital economy”, said the minister.
He also said that the announcement by the US Trade Representative the day before of the suspension of tariff sanctions against France because of its tax on digital services (see EUROPE 12631/4) was a “good signal” for further international negotiations. (Original version in French by Mathieu Bion and Marion Fontana)