- Presidency work programme
The Presidency presented the work programme for the ECOFIN Council for the coming twelve months together with the Finnish Finance Minister. The main priority of the two Presidencies is the implementation of the Lisbon Strategy for growth and jobs and the achievement of a stability-oriented fiscal policy in all Member States. The second major theme concerns the Financial Perspective 2007, where it is hoped to reach speedy agreement with Parliament on a new Interinstitutional Agreement and on the various legislative proposals from the European Commission. The Finance Ministers and the Commission approved the programme and expressed their support for the Presidency objectives.
- Implementation of the Stability and Growth Pact
Stability and convergence programmes
The Council adopted opinions on Finland’s stability programme and on the convergence programmes of the Czech Republic, Denmark, Hungary, Slovakia and Sweden. There was particular praise for the programmes of Finland, Denmark and Sweden, which demonstrate that fiscal policy can be conducted in harmony with the Stability and Growth Pact and the requisite long-term sustainability.
In Hungary’s case, the Council requested the presentation of a revised programme by 1 September at the latest, as the current programme does not specify sufficiently clearly how the desired budget goals can be achieved by 2008.
Excessive deficit procedure
The Council adopted a Decision under Art. 104(6) of the EC Treaty to the effect that an excessive deficit exists in the United Kingdom. The Council also makes recommendations to the United Kingdom in accordance with Art. 104(7) of the EC Treaty to correct the excessive deficit by the 2006-2007 financial year.
- Preparation of the European Council
Lisbon Strategy: The Commission and the Presidency explained the preparations for the spring summit of Heads of State or Government on 23-24 March. The Commission will adopt its progress report on the implementation of the Lisbon reform agenda for growth and jobs on 25 March. The Presidency stated that – as in previous years - there will be a Key Issues Paper from the ECOFIN Council setting out the main economic and fiscal challenges for the Heads of State or Government to discuss. He also drew attention to the fact that closer coordination between the individual policy areas and more systematic implantation of the European reform agenda in the Member States were key prerequisites for more growth and jobs in Europe. The ECOFIN Council will hold a first general debate on the progress report and on the Key Issues Paper at its next meeting in February. The report to the European Council will then be finally discussed at the March meeting.
Quality of public finances: The concept of the quality of public finances is reflected both in the fundamentals of the economic policy and in the reformed Stability and Growth Pact. The aim is, firstly, to boost the growth and employment effects with regard to public revenue and expenditure and, secondly, to ensure efficient allocation of resources and the principle of budgetary discipline. The ECOFIN Council has adopted conclusions that draw attention to the need to analyse the structural developments in the public budgets in greater depth and call for an exchange of best practices in respect of budgetary control instruments. This subject will be on the agenda of the ECOFIN Council again in autumn 2006.
The French Minister presented a memorandum on European energy policy geared to sustainable development. An exchange of views took place on various aspects such as energy supply, energy efficiency and energy security, competition and aid policy, and on aspects of lending and credit policy related to energy projects. It was also stressed that the recent developments underline the importance of this theme and that a continuation of the strategic discussion by the competent EU bodies is urgently required. The Presidency announced that the subject would be raised again at the ECOFIN Council in March.
- Taxation – Reduced VAT rates
A compromise was reached that was supported by 22 Member States. Three Member States, the Czech Republic, Poland and Cyprus, will decide in the next few days whether they can also accept the compromise. It provides that Annex K to the 6th VAT Directive will be extended to 31.12.2010, and that all Member States have the opportunity to apply this facility if they make an application to this effect with the Commission. On the basis of the findings of an independent think tank, the Commission will present a report by 30.6.2007 which contains a comprehensive evaluation of the effectiveness of reduced rates, particularly in relation to growth and jobs.