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Meetings Calendar 2006
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Results of the Informal ECOFIN Meeting, 7-8 April, Vienna

 

Economic Situation and Financial Markets Developments

The informal Ecofin Council discussed the present economic situation and short-term pros-pects, and possible risks for the global as well as the European economy.

In 2006, economic recovery will continue, with global growth of around 5%. The US and emerging Asian economies, including China and India, are the motor of growth. For Europe the 2006 economic outlook points to a firming upward swing, with growth rates of 2.2% for EU-25 and 1.9% for the Euro area.

The macroeconomic outlook is favourable, sentiment indicators underline the upward trend, private investment is developing positive. Rising employment prospects will contribute to stronger household confidence and consumption. Due to the economic recovery, the banking and insurance sector report satisfying yields for 2005, with continued positive prospects for 2006. Asset markets also show favourable developments.

There is broad agreement among Ministers, that the current economic recovery should be used by Member States to pursue a more determined implementation of structural reforms and for strengthening fiscal consolidation efforts. Ministers also concluded that some risks continue, i.a. global imbalances and oil price development, which must be closely monitored.

Globalisation

The discussion on globalisation, with participation of Chief Executive Officers of internation-ally active European companies, focused on two key questions: First, on how to preserve and further strengthen Europe's attractiveness as a business location and for foreign invest-ment. Second, on how to ensure a more equal distribution of benefits among citizens.

There is broad consensus that globalisation has positive effects on increasing living stan-dards. In order to strengthen Europe’s competitiveness, more ambitious reforms are needed in the field of research, innovation, education and training. In addition, completing the internal market, enhancing efficiency of network industries, improving quality of the regulatory framework and promoting entrepreneurship must be other key priorities on the European reform agenda.

Protecting people instead of jobs has to be at the forefront of labour market reforms. In re-spond to the acceleration of economic and social changes, Europe needs well qualified em-ployees and well functioning and efficient social security systems. In this context, it is of ut-most importance to increase adaptability of labour markets, while at the same time quickly reintegration of those loosing their jobs must be ensured. Further, European enterprises are encouraged to behave in socially responsible ways.

Company Taxation

In close context with completing the Single Market, Europe also needs more transparent and cost-efficient tax systems. Against this background, Ministers had an exchange of views on how to proceed with the aim to reach more uniform rules with respect to company taxation. The discussion focussed on the pros and cons of a common consolidated corporate tax base. Broad consensus has been reached that this could be an appropriate approach in or-der to effectively address tax obstacles for companies operating in more than one Member State. The Ecofin Council will come back on this issue at its meeting in June.

Spring Meeting of the Bretton Woods Institutions

Under this topic, the informal Ecofin Council had a first debate on the future strategic direc-tion of the IMF. Ministers agreed that the IMF has to adapt to the important changes facing the global framework by better focussing on its core responsibilities and by increasing coher-ence and efficiency within and across its areas of activities. In concrete, surveillance needs to be more effective, multilateral dimension of surveillance should be strengthened, and the role of the IMF in the field of crisis prevention and resolution should be improved.

Working Methods

Finally, Ministers of Finance agreed that the Ecofin Council will improve its working methods in order to further enhance the effectiveness and efficiency of economic and financial policies coordination in Europe. Main objectives of these improvements are focussing on strategic issues, promoting exchange of views on best practices and benchmarks, and ensuring better guidance for Member States' reform priorities.

 

Date: 08.04.2006