|
|
|
|
|
|
 |
|
 |
|
European Council agrees on roadmap for deepened and reinforced Economic and Monetary Union
The European Council has agreed on a roadmap for the further development of Economic and Monetary Union (EMU), based on deeper integration and reinforced solidarity. At their meeting on 13-14 December, European leaders decided to begin the process with the completion, strengthening and implementation of the newly enhanced economic governance, as well as the adoption of the Single Supervisory Mechanism and of the new rules on recovery and resolution and on deposit guarantees. The process will culminate in the establishment of a single resolution mechanism. The roadmap is based on the 5 December Report by Herman Van Rompuy, President of the European Council, established in close collaboration with the Presidents of the European Commission, Eurogroup and European Central Bank and on the “Blueprint” issued by the Commission in November. Other issues will be further examined in time for the June 2013 European Council. These include the coordination of national reforms (based on Article 11 of the Treaty on Stability, Coordination and Governance), the social dimension of EMU, the feasibility and modalities of mutually agreed contracts for competitiveness and growth, and solidarity mechanisms and measures to promote the deepening of the Single Market and to protect its integrity. The European Council also launched work on the 2013 European Semester on the basis of the Commission's Annual Growth Survey.
|
|
|
 |
|
|
|
 |
|
|
|
|
 |
 |
No door was closed on steps towards deeper EMU and we will keep moving forward. The Commission will keep driving the ambition.
José Manuel Barroso
President of the European Commission |
 |
|
|
|
|
|
 |
|
Finance ministers agree on Single Supervisory Mechanism (SSM), ready to start negotiations with European Parliament
At their meeting on 13 December, European finance ministers agreed on Commission proposals aimed at establishing a Single Supervisory Mechanism (SSM) for the oversight of banks. The presidency of the Council will now negotiate with the European Parliament with the aim of adopting the legislation before the end of the year. Once an effective SSM is established, Heads of State and Government of the euro area have agreed that the European Stability Mechanism (ESM) could, subject to strict conditionality and in compliance with state aid rules have the possibility to recapitalise banks directly, thus breaking the vicious circle between banks and sovereigns that has been a salient feature of the crisis. Under the proposals, the European Central Bank (ECB) will have direct oversight of euro area banks, although in a differentiated way and in close cooperation with national supervisory authorities. The ECB's monetary tasks would be strictly separated from supervisory tasks to eliminate potential conflicts of interest between the objectives of monetary policy and prudential supervision. Non-euro area Member States wishing to participate in the SSM will be able to do so by entering into close cooperation arrangements.
|
 |
|
|
|
|
|
|
 |
|
Eurogroup approves second disbursement of aid to Greece
On 13 December, the Eurogroup comprising the 17 euro area finance ministers formally approved the second disbursement under the second economic adjustment programme for Greece. The Eurogroup gave its approval following finalisation of the relevant national procedures and after reviewing the outcome of the debt buy back operation conducted by Greece earlier this month. The European Financial Stability Facility (EFSF) will release the disbursement of EUR 49.1 billion in several tranches, with a first amount of EUR 34.3 billion paid out before the end of the year and the remainder disbursed in the first quarter of 2013. The latest financing, together with the initiatives agreed by the Eurogroup on 27 November and full implementation of the adjustment programme, should put Greece's public debt back on a sustainable path to 124% of GDP by 2020. Vice President Olli Rehn said: “Today's decisions by the Eurogroup mark the conclusion of many long months of uncertainty for Greece. They open the way for a return of confidence, of investment, of growth and job creation for the Greek people.”
|
|
|
|
|
|
|
|
 |
|
Fiscal Sustainability Report 2012: stay the course to ensure sound public finances
Issued by the Commission on 18 December, the Fiscal Sustainability Report 2012 analyses the sustainability of public finances in the Member States. This year’s report notes that the deterioration in fiscal positions and increases in government debt since 2008, compounded by demographic ageing, make fiscal sustainability an acute policy challenge. Unless fiscal and structural policies are adjusted further, debt in the EU would remain very high in the coming decade, and rise further in the mid-2020s as the fiscal pressure from an ageing population takes hold more firmly. Despite the difficult situation, the report shows that by taking determined action to improve fiscal positions further and by attaining the medium-term budgetary objectives (MTOs) the EU countries have set for themselves, government debt would be on a clear downward path in the EU. It would fall below 60% of GDP by 2030. The report concludes that strict adherence to the EU fiscal rules is necessary, and that it will lead to sustainable debt levels.
|
|
|
|
|
|
|
|
 |
|
Special Commission report analyses current account surpluses in the context of macroeconomic imbalances
The Commission published a report on current account surpluses in the EU on 18 December. The report is particularly important in the context of the large macroeconomic imbalances that have built up in the euro area and the EU in recent years. This special analytical report analyses the persistently large current account surpluses in a number of Member States, exploring whether the surpluses have been optimal from the perspective of the Member State, whether there is a link between surpluses and deficits in the euro area and whether there is a sustainable rebalancing in the euro area (and the EU) underway.
|
|
|
|
|
|
|
|
 |
|
Quarterly Report on Euro Area presents new approach to analysing housing market overheating
The last 2012 edition of the Quarterly Report on the Euro Area assesses in its focus section, the dynamics of house prices in the euro area. Its analysis of cyclical overvaluation of house prices uses an analytical toolkit for assessing housing market imbalances and groups countries according to the nature of their boom and bust cycles. Other sections examine the impact of fiscal decentralisation on fiscal discipline and design principles for housing taxation systems. The final section provides an econometric analysis of risk and uncertainty in euro area sovereign debt markets. It notes that investors now ask higher spreads for a given level of public debt or deficit, and that they have become more aware of implicit sovereign liabilities related to banks. The analysis concludes that a significant part of the surge in spreads could be partly reversed by the consistent implementation of EMU reforms, as proposed in the Commission’s recent Blueprint for a deep and genuine Economic and Monetary Union.
|
|
|
|
|
|
|
|
 |
|
Work of Task Force for Greece gathering momentum, third quarterly report issued
The third quarterly report issued by the Task Force for Greece assesses the state of structural reforms in Greece, focusing on areas such as budget and taxation, anti-corruption measures, reform of the central public administration, the business environment, cohesion policy, financial institutions, health reform and immigration policy. The Task Force organises the delivery of technical assistance to support a wide range of structural reforms to be implemented by the Greek government, primarily those reforms agreed in the context of the economic adjustment programme. The technical assistance process temporarily lost momentum in the period from March to June when two rounds of general elections were held, but has intensified since appointment of the new government. The TFGR was officially established by EC President Barroso on 20 July 2011, at the request of the Greek Prime Minister. It works under the political guidance of Commission Vice President Olli Rehn.
|
|
|
|
|
|
|
|
 |
|
Giving businesses a “second chance”: Commission proposes to modernise insolvency rules
Viable businesses hit by the economic crisis will be given a “second chance” under a new Commission proposal to modernise Europe’s rules on cross-border business insolvency. The new rules announced on 12 December will shift focus away from liquidation and develop a new approach to helping businesses overcome financial difficulties, all the while protecting creditors’ right to get their money back. Around half of enterprises survive less than five years, and around 200,000 firms go bankrupt in the EU each year. A quarter of these bankruptcies have a cross-border element. Yet evidence suggests that failed entrepreneurs learn from their mistakes and are generally more successful the second time around. Up to 18% of all entrepreneurs who go on to be successful have failed in their first venture. It is therefore essential to have modern laws and efficient procedures in place to help businesses, which have sufficient economic substance, to overcome financial difficulties and to get a “second chance”.
|
|
|
|
|
|
|
|
|
|
|
 |
|
Quality of Public Expenditure in the EU. European Economy. Occasional Papers 125
This report was requested by the Heads of State or Government on 28-29 June 2012. Its purpose is to monitor the impact of budget constraints on growth-enhancing public expenditure and on public investments. The report reviews trends in the composition of public expenditure in the EU, discusses different notions of expenditure efficiency, reviews ways within the EU budgetary frameworks to prioritise growth-friendly and efficient expenditures and spells out a possible way forward in the context of the European Semester. The report rejects the case for a “golden rule” – a rule that excludes public investments from the relevant deficit figures – thus confirming the approach taken in the Maastricht Treaty and the Stability and Growth Pact (SGP). It calls on Member States to do more to prioritise growth-friendly spending items, such as education and training, R&D and selected investment projects, within national policy frameworks.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Directorate-General for Economic and Financial Affairs |
|
|
