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EU Finance ministers support Commission's investment plan, approve measures against tax fraud and tax evasion
During their discussions on 8-9 December, EU finance ministers expressed their support for the EUR 315 billion investment plan presented by the Commission and discussed the work of the EU Task force set up to identify potentially viable investment projects. The next step will be for the Council of Ministers to invite EU Heads of State or Government to endorse the Commission's investment plan at their European Council meeting of 18-19 December. The Commission is expected to submit a legislative proposal in January 2015, the aim being to adopt it by June 2015. Ministers also approved two measures designed to prevent tax fraud and tax avoidance: an anti-abuse clause to be included in the EU’s parent-subsidiary directive will clamp down on aggressive tax planning by corporate groups, while a directive extending the mandatory and automatic exchange of information between tax authorities will help prevent tax evasion and fraud by individual taxpayers.
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| This is not just a one-off stimulus measure, but a structural plan - or structural reform – at European level. |
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Jyrki Katainen - Vice-President for Jobs, Growth, Investment and Competitiveness
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Investment plan for Europe: EU Task Force identifies 2,000 potential projects worth EUR 1.3 trillion
The EU Task Force on Investment, composed of representatives from the EU Member States, the European Investment Bank, and the European Commission, published a report on 9 December that shows there is significant potential for investment in Europe. The report identifies around 2,000 projects across Europe worth some EUR 1.3 trillion in potential investments, and of this amount over EUR 500 billion worth of projects could potentially be implemented over the next three years. Many of these projects are currently not being realised due to financial, regulatory or other barriers. The report recommends immediate action to create a transparent pipeline of investment projects. The central idea is to provide a pipeline of viable projects in key growth-enhancing areas which will restore investor confidence and unlock private sector investment to complement finance from Member States and the EU. Projects may successfully access funding from the private sector alone, through Member States or from other sources of EU funding, including the foreseennewly created European Fund for Strategic Investments (EFSI) that is being setup.
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Eurogroup favourably disposed to accept the request of Greece for a technical extension of 2 months of the 2nd economic adjustment programme
The Eurogroup confirmed on 8 December that it would be favourably disposed to a request by Greece for a technical extension by 2 months of the current European Financial Stability Facility (EFSF) programme. On 9 December, Greece requested officially this extension, as well as an Enhanced Conditions Credit Line (ECCL) under the ESM once the EFSF programme expires definitively, and national procedures have been initiated with a view to formalise the technical extension before end-2014. The Eurogroup welcomed recent positive macroeconomic developments in the Greek economy and the progress made by the Greek authorities in addressing the outstanding issues in order to conclude the fifth review, as assessed by the European Commission, the European Central Bank and the International Monetary Fund. While there has been clear progress in a number of areas, progress has not been rapid enough to allow for conclusion of the review before the end of this year. Once the review is completed in early 2015, staff-level agreement is reached and all the prior actions are fulfilled, the way would be cleared for the disbursement of the EUR 1.8 billion outstanding under the current EFSF programme.
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Commission staff concludes the sixth – and possibly final – Post-Programme Surveillance mission to Hungary
European Commission staff conducted a sixth and possibly final post-programme surveillance mission to Hungary from 25-28 November 2014 to review recent economic and financial developments and policy initiatives. The mission follows conclusion of the 2008-2010 EU balance of payments assistance programme. The mission noted that Hungary has experienced a strong economic recovery, but attributed part of that high growth to one-off factors such as the increased absorption of EU funds and short-term stimulus measures. Growth is thus projected to decelerate in the years beyond 2014. Hungary is on track to achieve this year's deficit target of 2.9% of GDP, but government debt is not yet on a firm downward path and the country risks breaching the requirements of the Stability and Growth Pact. As Hungary has repaid over 70% of the amount originally disbursed to it, and the legal requirement to automatically continue with post-programme surveillance has thus expired, the Commission, after consulting with Member States, will decide in the coming weeks whether or not to end its post-programme surveillance.
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Ukraine: EUR 500 million EU Macro-Financial Assistance loan disbursed
The European Commission, on behalf of the EU, disbursed EUR 500 million to Ukraine on 3 December. This is the second and final loan tranche of the EU’s EUR 1 billion Macro-Financial Assistance (MFA II) programme for Ukraine that was approved earlier this year. The disbursement comes on top of the EUR 860 million provided so far under the two ongoing MFA programmes for Ukraine. The objective of the MFA programmes is to support Ukraine financially while encouraging important structural reforms aimed at improving governance, delivering sustainable economic growth and supporting legislative harmonisation with the EU. Specifically, the MFA supports reforms in the areas of public finance management and anti-corruption, trade and taxation, the energy sector and the financial sector. The final disbursement of EUR 250 million will be made by spring 2015, provided that Ukraine shows satisfactory progress in implementing agreed reforms.
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Commission meets with Latvian government ahead of its EU Presidency
The European Commission received the Latvian government on 3 December in Brussels to exchange views and prepare the Latvian Presidency of the Council of the European Union, which will start on 1 January 2015. Commission President Jean-Claude Juncker and Latvian Prime Minister Laimdota Straujuma agreed that the economic priority of the Latvian Presidency will be the implementation of the recently announced EU investment plan that will unlock public and private investments in the real economy of at least EUR 315 billion over the next three years. In particular, the legal framework for establishing the European Fund for Strategic Investments (EFSI), the main investment vehicle, needs to be in force by June 2015.
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ECFIN videos explore key economic policy topics in an engaging way
Under the heading “European Economy Explained”, DG ECFIN has launched a series of videos that explore key economic policy topics. Using animations in a storytelling format, the videos make understanding complex economic policies easy and painless. The first video, “Climbing higher together. Structural reforms for growth”, was launched on 2 December. It shows how the EU helps countries achieve stronger economic growth through structural reforms and targeted policies. This first video was soon followed by a second video released on 9 December, “Everyday training. Managing our economies”, which explains how the EU provides robust and independent assessments of national policies and helps governments to coordinate their economic policies. A third video in the series, “Navigating stormy seas. Preventing future crises”, will be released on 16 December.
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Infrastructure in the EU: Developments and impact on growth. European Economy. Occasional Paper 203
This report analyses the macroeconomic impact of infrastructure development in the EU, focusing on inland transport and energy. It also assesses infrastructure investment patterns in Member States, before and after the economic crisis. Over the last four decades, all Member States have expanded their transport and energy infrastructure networks, but the availability and quality of infrastructure still varies considerably across the EU. The report confirms that increased investment in infrastructure can have a positive impact on growth, provided it is well targeted. Far from advocating indiscriminate public investment in infrastructure, however, this paper argues that investment must take into account macroeconomic conditions, including fiscal constraints and the need to increase private financing.
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Net International Investment Positions (NIIP) (% of GDP)
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The range of external liabilities in the EU is very wide and the risks to financial sustainability remain high in many member states.
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| Directorate-General for Economic and Financial Affairs |
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