Brussels, 06/10/2006 (Agence Europe) - Meeting in Luxemburg on 10 October, EU finance ministers will have several points on the agenda of an Ecofin Council dominated by the implementation of the Stability and Growth Pact (SGP) and a whole series of conclusions on various issues.
The ten euro zone finance ministers, on Monday evening, then the twenty five finance ministers, on Tuesday, will discuss the German, British and Hungarian deficits. They will give their opinion on Budapest's updated convergence programme, which the Commission endorsed at the end of September (see EUROPE 9273). The Commission noted that Hungary's budgetary deficit had been worsening since 2004, and, without effective measures this year, could reach 11.6% of GNP. The Commission, therefore, proposed that the Council call on Hungary to correct its deficit by 2009, with the programme allowing for a deficit of 10.1% in 2006, 6.8% in 2007, 4.3% in 2008 and 3.2% in 2009. The Council is likely to follow the Commission's opinion and, on the basis of Article 104§7 of the Treaty, tell Hungary to take effective measures by 10 April 2007.
For Germany, the outlook is brighter after the informal meeting in Helsinki (see EUROPE 9261), where ministers welcomed with satisfaction the new deficit figures for 2006. Given formal notice in March to bring the deficit back below 3% by 2007 (see EUROPE 9151), Berlin is expected to reach this objective with a year to spare and expects to end the 2006 financial year with a deficit of 2.8% of GDP (and 2.5% in 2007). In July, the Commission considered that the measures taken for the current year were sufficient (see EUROPE 9236), even though structural adjustment was less than expected. The Council is likely, then, not to deem any further measure necessary at this point, while recommending that the German budgetary development be followed closely.
In January, the United Kingdom became one of the countries with an excessive debt (see EUROPE 9116). With London ending the 2004-2005 with a 3.3% deficit (following a 3.2% deficit in 2003-2004), the Council instructed on it to come back within SGP limits for 2006-2007. In September, the Commission said that, while the UK was moving towards a deficit of 3% for the current financial year, no measure to reduce the budget balance in structural terms was included in the budget of March 2006 and that the annual adjustment of 0.5% would perhaps not be reached. While no further measures are required, great uncertainty continues to hang over the correction of British public finances in due course, the Commission concluded.
Based on the work of the economic policy committee, the Council will adopt conclusions on reduction of the administrative load on companies, which will highlight that progress is expected at both national and Community levels. The Commission is expected to adopt a communication on “Better regulation” on 14 November. Ministers will also have an exchange of views on how the criterion on the inflation level necessary for accession to the euro zone is interpreted. There was great debate over this issue when Lithuania, with a level only slightly above the reference level, but not presenting all the long-term guarantees (see EUROPE 9193) was not allowed to join the euro zone. The Council will also adopt conclusions on the quality of public finances, with particular reference to the role of the institutions and national budgetary rules in consolidation. It will try to make progress on the renewal of the European Investment Bank's (EIB) external mandate, on which the Finnish Presidency would like to reach political agreement by the end of the year, examining the new amounts and regional distribution for the 2007-2013 period (see EUROPE 9230). After the Helsinki informal, ministers will reconsider Ecofin's working methods, innovation policy, energy policy and the stability of the financial system. The reform of the International Monetary Fund (IMF) and EU representation at international level will also be discussed over lunch.
The Council will have an exchange of views on the Commission's political options on the development of clearing and settlement sector. To increase competition in these “post trading” transactions, Commissioner McCreevy indicated in July his preference for a solution that came from the industry, rather than from a European legislative initiative (see EUROPE 9230). The European Central Bank, too, was reflecting on the possibility of creating a single clearing and settlement system within the euro zone.
Finally, the Council will adopt conclusions on the creation of a European payments area in the euro zone (SEPA). In these conclusions, it will evaluate the ongoing work in the industry and will identify those areas in which progress is still needed. The commitment of Member States to use the financial products that the SEPA initiative will produce as quickly as possible remains a problem as yet unresolved problem by the Council. (ab/mb)