Following the example of their euro area counterparts the day before (see EUROPE 12801/18), the European Finance Ministers will discuss the sharp rise in energy prices in Luxembourg on Tuesday 5 October.
This surge in energy prices is by far the most important factor in the current rise in inflation. It reached 3.4% in September, according to a Eurostat estimate published on Friday 1 October (see other news).
At this stage, the ECB is maintaining its very accommodating monetary policy, because it believes that this inflationary surge will be temporary before it subsides in the medium term, during 2022.
However, as winter approaches, several Member States are taking national measures to protect purchasing power, as in France and Italy. Others, such as Spain, Poland (see EUROPE 12802/1), and Greece (see other news), are proposing Europe-wide measures, such as the constitution of joint stocks. Germany’s view is that market forces should be allowed to operate.
“At European level, we can do almost nothing”, a diplomatic source said on Friday.
The dossier is also on the agenda of the Environment Council, which will meet on Wednesday 6 October, and the European Council on 21 and 22 October. By the time of the EU summit, the European Commission should have presented a toolbox of possible European measures (see EUROPE 12796/9).
The impact of rising energy prices could have an impact on some of the measures in the ‘Fit for 55’ climate package, in particular the legislative proposal to revise energy taxation to penalise polluting fuels (see EUROPE 12762/9).
Next Generation EU. The ministers will take stock of the progress of the national recovery plans in the framework of the Next Generation EU Recovery Plan.
They will formally adopt the Maltese plan, endowed with €316.4 million in grants only (see EUROPE 12792/25). See the decision to approve this plan: https://bit.ly/3FaISAw; and its annex: https://bit.ly/3B2Kh9A
Early next week, the Commission is expected to approve the Finnish and Estonian plans. The Hungarian, Polish, and Swedish plans have yet to be approved, as the Netherlands and Bulgaria are the only two Member States that have not officially submitted their recovery plans. An extraordinary meeting of the Ecofin Council will take place on Thursday 28 October, remotely, to adopt new plans, potentially the Swedish, Finnish, and Romanian plans.
Overall, Member States feel that the European Recovery Plan is progressing well, with joint borrowing on the markets allowing many of them to receive financial support at lower cost.
However, when the issue of the delay in approving the Polish and Hungarian recovery plans has been raised in Council, they keep a low profile, arguing that negotiations are still ongoing between the Commission and the Polish and Hungarian authorities, notably on the issue of respect for the rule of law and the fight against corruption.
If the two plans are not adopted by the end of 2021, Hungary and Poland will not be eligible for pre-financing, a diplomatic source warned on Friday.
Ministers will also be asked about the link between the European Recovery Plan and the budgetary process of the ‘European Semester’ with a view to adopting guidelines on monitoring and reporting issues by the end of 2021. According to a note from the Slovenian Presidency of the EU Council, the return of country-specific recommendations could be envisaged in 2022, in particular to monitor closely the emergence of macroeconomic imbalances. The same applies to the follow-up of country-specific recommendations that are not addressed through the National Reform Plans.
SURE. The Commission will present to ministers its recent report on the implementation of the SURE instrument to support national short-time working schemes, activated to tackle the Covid-19 pandemic. In 2020, this instrument supported 31 million workers (22.5 million employees and 8.5 million self-employed) and 2.5 million enterprises (see EUROPE 12796/12).
Out of an allocation of €100 billion, an envelope of €6 billion remains available through the end of 2022. Beyond that, the question of the sustainability of such an instrument does not arise at this stage.
See this note: https://bit.ly/3uzsX9R
Solvency II. In addition, the Ecofin Council will have a first exchange of views on the recent legislative package to revise the ‘Solvency II’ prudential framework for the insurance sector (see EUROPE 12796/7). The proposals on the table aim to recalibrate the rules to take account of a low or even negative interest rate environment, strengthen consumer protection, and encourage industry to invest more in the green and digital transitions. They create a new framework for the resolution of insurance companies without creating a specific governance at European level (see EUROPE 12795/1).
Climate. The ministers will adopt conclusions on climate finance, including the level of EU financial support for vulnerable countries, ahead of the UN COP26 conference in Glasgow at the end of October.
Finally, they will coordinate their position for the autumn meetings of the G20 finance and international financial organisations. (Original version in French by Mathieu Bion)