Brussels, 29/02/2008 (Agence Europe) - On Tuesday 4 March, EU finance ministers will put the finishing touches to their contribution to the Spring Council on 13-14 March. They will examine, in particular, the Commission communications on sovereign wealth funds and financial stability.
On the evening before the Ecofin Council, the Eurogroup will examine the economic situation in the euro area in the light of the European Commission's recent interim forecasts, published on 21 February (see EUROPE 9607). Unsurprisingly, these forecasts reduced growth projections for this year to 1.8% in the euro area. At the same time, the economy of the 15 euro area countries is confronted with a rise in inflation, expected to be about 2.6% on average, and a surge in the euro exchange rate. With the dollar paying the price of speculation about a possible recession in the United States, the euro has seen its value rise, over the last two days, to $1.52. Oil prices are continuing to rise, reaching record levels of over $100 a barrel. There promises then to be a great deal for ministers to discuss with European Central Bank (ECB) President Jean-Claude Trichet on Monday evening. On Thursday 28 February, Eurogroup President Jean-Claude Juncker was once again scathing of the huge volatility on foreign exchange markets, calling for them to take more account of the fundamentals of the US economy. It is not under the threat of a real recession, according to the Commission, and its fundamentals are sound, Juncker added.
Stability and convergence programmes. After a first salvo at its previous meeting (see EUROPE 9600), the Council will assess the updated programmes of a further 14 member states: Austria, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Greece, Ireland, Latvia, Lithuania, Malta, Portugal, Slovenia and Spain. The Commission gave its recommendations in two separate volleys (see EUROPE 9601 and 9605), and was critical of some countries' lack of ambition shown on reaching their medium-term objective (MTO) by 2010.
Preparation of the European Council. Ministers are due to approve two new reports to be sent to heads of state and government as part of the consideration of the renewed Lisbon strategy. One is on the EU's broad economic policy guidelines (BEPG), and the other provides country-specific recommendations for 2008 (see related article). Ministers will also adopt an interim report on financial stability, which will examine ongoing work as part of the specific roadmap adopted in October 2007 (see EUROPE 9612), and will discuss sovereign wealth funds (SWFs). The communication adopted by the Commission last week suggested a European approach to SWFs which would allow the EU to speak with one voice when the IMF draws up an international code of conduct (see EUROPE 9611 and 9610).
Budget guidelines for 2009. The Council is due to adopt conclusions on the priorities for the 2009 budget. It will stress the need for “strict” compliance with the multi-annual financial framework, as revised on 18 December 2007 (to fund Galileo the European satellite navigation system, see EUROPE 9565). Expenditure must remain strictly within the limits fixed by the framework and sufficient margins must be maintained under all the ceilings of the various headings, with the exception of sub-heading 1b, for the purposes of sound financial management and particularly to cater for unforeseen circumstances. The Council will highlight the “constantly growing role” of the common foreign and security policy (CFSP) and the need for it to continue to be adequately funded. The Council will express its concern about the evolution in appropriations for pensions and their impact on administrative expenditure in the future. Thus, it will call on the Commission quickly to provide an updated estimate of annual Communities' pension expenditure at least up to 2013. The Council will also reiterate the importance of keeping the funding of the EU's decentralised agencies under firm control.
Taxation. The Ecofin Council is due to adopt conclusions on the issue of combating VAT fraud (see related article) and the Commission will report on discussions with Singapore, Hong Kong and Macau on savings tax measures (see EUROPE 9593).
Over lunch, ministers will discuss the World Customs Organisation, the post of secretary general of which is due to become vacant, and will hold a first discussion on the appointment of a successor to Jean Lemierre at the head of the European Bank for Reconstruction and Development (EBRD). Frenchman Lemierre has been the president of the EBRD since 2000 and will not be putting himself forward for a third term of office. Several people, with the support of their respective governments, have declared their interest in being appointed to the post: Governor of the Czech Central Bank Zdenek Tuma, German Secretary of State for Finance Thomas Mirrow, former Greek Finance Minister Yannos Papantonniou, and former Governor of the Hungarian Central Bank Gyorgy Suranyi. (A.B./M.B.)