On Friday 14 July, the European finance ministers will discuss two aspects of the revision of the 2021-2027 Multiannual Financial Framework (MFF), namely macro-financial aid to Ukraine and the creation of own resources in the EU budget, the reform of the customs system and Pillar I of the OECD agreement on the taxation of multinationals.
MFF/Ukraine. On Friday, the Spanish Presidency of the Council of the EU would like the ministers to debate the future financial facility to stabilise the EU’s macroeconomic assistance to Ukraine until 2027, to the tune of €50 billion (see EUROPE 13205/9).
The continuation of aid to Ukraine is not contested among the Member States, as long as strong conditionality exists in terms of reforms and control over the use of funds. Some countries, such as the Netherlands, would be inclined to separate the proposal for macrofinancial assistance to Ukraine from the overall revision of the MFF, which calls for a budget increase of €65.8 billion (see EUROPE 13219/2). Other countries, on the other hand, believe that such decoupling would ‘kill’ the mid-term review of the MFF.
The Spanish Presidency considers that the MFF reform should be dealt with as a package by the ‘General Affairs Council’, with a contribution from the ‘Ecofin’ Council on aid to Ukraine. Ambitiously, it hopes to be able to reach a political agreement in October.
However, the hostility of Poland and Hungary to the revision of the MFF, which they link to the blockage on their national post-Covid-19 recovery plan, the reluctance of the ‘frugal’ countries to contribute more to the EU budget, and the elections scheduled for November in the Netherlands are likely to slow down a procedure requiring a unanimous decision by the Member States.
MFF/own resources. The European Commission will present to the Member States its new proposal to create new own resources for the EU budget, notably through a contribution based on company profit statistics (see EUROPE 13205/2), which completes an initial package.
An exchange of views between ministers is expected on Friday, although this proposal is still at an early stage.
Stability Pact. The Stability Pact reform is not officially on the agenda for the July meeting of the ‘Ecofin’ Council.
However, the Spanish Presidency intends to continue the sustained pace of discussions at technical level, with meetings scheduled for August. It has sent national delegations a document (‘issues note’) which identifies four main areas of focus: - institutional balance; - the common criteria (‘safeguards’) for reducing public debt; - creating sufficient room for manoeuvre to stimulate investment and structural reforms; - ownership and control of compliance with future European fiscal rules.
The Spanish authorities intend to hold as many technical discussions as possible, including at the informal ministerial meeting in Santiago de Compostela in mid-September, in order to be able to present an acceptable compromise proposal for the October Ecofin Council.
There is a shared desire to reach an agreement before the end of the year, a French ministerial source confirmed on Wednesday 12 July. In her opinion, it is too early to talk about quantified criteria for consolidating public finances, a measure that Germany is calling for.
Customs union. The Commission will present to ministers the legislative package on customs reform that it proposed in May (see EUROPE 13184/4). It comprises three measures: - a new EU customs data hub; - a new authority, the EU Customs Authority; - a more modern framework for online trade.
The aim of these texts is to improve cooperation between national customs authorities, by pooling data on a single, modernised system. They are also intended to make platforms more accountable for products that do not comply with European legislation.
On Friday, the ministers will exchange views in order to provide political guidance for the technical work.
Taxation/OECD. Following the progress of work on Pillar I of the OECD agreement on the taxation of multinationals (see EUROPE 13221/23), the Spanish Presidency will provide an update. It hopes that the EU countries, which have all signed the Outcome Statement, will welcome the decisions taken, which still need to be refined at a technical level.
This desire to be at the forefront of the reform of the international tax system should be reflected in the position that the Europeans will defend at the G20 ‘Finance’ meeting under the Indian Presidency (14-18 July in Gandhinagar).
RRF. Without debate, the ministers will adopt the revision of the post-Covid-19 recovery plans to include a ‘REPowerEU’ chapter for France (https://aeur.eu/f/81l ), Ireland (https://aeur.eu/f/81m ) and Malta (https://aeur.eu/f/81n ) (see EUROPE 13209/29). They will do the same for Slovakia’s revised recovery plan, which the Commission approved at the end of June (https://aeur.eu/f/81o ) (see EUROPE 13171/16).
European Semester. Finally, the ‘Ecofin’ Council will formally approve the country-specific socio-economic policy recommendations that Member States will use as a basis for drawing up their draft national budget plans for 2024.
See country-specific recommendations: https://aeur.eu/f/82c
Conclusions will also be adopted, without debate, on the 2023 in-depth reviews as part of the procedure concerning macroeconomic imbalances. According to the Member States, this procedure should be used to the full extent, including through the opening of infringement proceedings, with the Commission being invited to explain clearly why, in specific cases, it is not doing so.
See the draft Council conclusions: https://aeur.eu/f/82d (Original version in French by Mathieu Bion and Anne Damiani)