Unveiling details of the latest European Union Economic and Financial Affairs
Council (Ecofin) meeting, Luxembourg’s Prime Minister and Eurogroup President
Jean-Claude Juncker underlined the fact that the crisis that exists is not a euro
crisis but rather a sovereign debt crisis in some euro zone member states.
According to the Luxembourg administration, ministers discussed during the
course of the meeting progress regarding implementation of the Greek and Irish
adjustment programmes, to ensure that the relevant loan disbursements could
take place as per schedule.
Regarding recent developments in the euro zone, it was noted that the prognosis
for the actual economy remains positive, as confidence indicators continue to
increase significantly and as the euro zone economy is due to continue to grow
in the first quarter of 2011, as well as in subsequent quarters.
Although the situation remains volatile, measures taken by Portugal and Spain
appear to have been very useful, the Luxembourg administration revealed. Eurogroup
President Juncker qualified efforts made by Spain and Portugal in terms of budgetary
consolidation and of implementing structural reforms as “exemplary”.
Following on from recommendations made during the last Ecofin meeting, held
on December 16 and 17, Luxembourg’s administration stated that the Eurogroup
had initiated discussions on a comprehensive response to the challenges facing
the economic and financial stability of the euro zone. Here, Juncker confirmed
Eurogroup plans to accelerate its works in order to present its conclusions
to the European Council as quickly as possible.
During the course of the meeting, proposals expected to form the outline of
the future European stability mechanism in March were examined. The future mechanism
is designed to definitively replace the existing European Financial Stability
Facility (FESF) from mid-2013. The administration pointed out that discussions
would take place both within the Eurogroup as well as within an intergovernmental
framework to include countries from outside of the euro zone. Both formats will
be presided by the president of the Eurogroup, the administration added.
Other items on the agenda included the procedure concerning Malta’s excessive
deficits, the introduction of the euro in Estonia, and national reform programmes.
Items approved by the Council during the meeting include the decision to allow
the UK, by way of derogation from the value-added tax (VAT) directive, to continue
restricting the right of VAT deduction on the hire or leasing of vehicles not
entirely used for business purposes, and the decision authorizing France to
apply reduced rates of taxation to unleaded petrol and gas oil used as fuel.
The Council also reached political agreement on a draft regulation laying down
new implementing measures for the EU system of VAT. The draft regulation clarifies
certain aspects of the VAT directive with the aim of ensuring better compliance
with the objectives of the EU internal market. The regulation is due to be adopted
without discussion at a forthcoming Council meeting.
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