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Eurogroup welcomes Commission assessment of draft budgetary plans
Euro area finance ministers welcomed completion on 22 November of the first round of the new coordination process established by the Two-Pack Regulation. The new process is designed to strengthen budgetary surveillance in the euro area by assessing national draft budgetary plans before they are finalised by national parliaments. Under the two-pack process, euro area Member States scrutinised and discussed each other’s draft budgets. They based their discussions on the in-depth assessments provided by the Commission on 15 November on both the draft budgetary plans of all euro area Member States and on the budgetary situation and prospects for the euro area as a whole. The Eurogroup broadly concurred with the Commission’s analysis and found that years of fiscal consolidation in the euro area are now bearing fruit. The government deficit in the euro area, already close to 3% of GDP in 2013, is expected to fall further in 2014 and the aggregate debt level will stabilise. This will help support the nascent recovery. Despite progress on the budgetary front, finance ministers emphasised the continued importance of implementing the structural reforms recommended under the European Semester.
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| Even three years ago, few would have given credence to the idea that finance ministers would come together to exchange views and have a serious and substantive, action-oriented discussions on their draft budgetary plans, on the basis of opinions issued by the Commission. And yet, here we are today. |
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Olli Rehn, Commission Vice-President responsible for Economic and Monetary Affairs and the Euro
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ECFIN Annual Research Conference highlights the challenges of a re-designed EMU in an international perspective
Leading figures from academia and economic policy-making circles convened at the ECFIN Annual Research Conference on 26 November, which was hosted by Olli Rehn, Vice-President for Economic and Monetary Affairs and the Euro. While long-term solutions to the crisis in the EU and euro area are emerging, the fall-out from the crisis continues to weigh heavily on growth and jobs, bringing severe hardship to many. Participants discussed the global economic environment and sought to reach consensus on the level of coordination and degree of variation that would be appropriate both within the EU and at the international level. Across four sessions, the conference addressed the combination of old and new risks facing major economies and the role of capital markets and of EU macro-structural economic policies.
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New EU corporate tax rules to significantly reduce tax avoidance in Europe
The Commission has proposed amendments to key EU corporate tax legislation, in order to significantly reduce tax avoidance in Europe. The proposal issued on 25 November will close loopholes in the Parent-Subsidiary Directive, which some companies have been using to avoid taxation. In particular, companies will no longer be able to exploit differences in the way intra-group payments are taxed across the EU to avoid paying any tax at all. The result will be that the Parent-Subsidiary Directive can continue to ensure a level-playing field for honest businesses in the Single Market without opening opportunities for aggressive tax planning. This proposal was part of the Commission's Action Plan against tax evasion that was published last year. Member States are expected to implement the amended Directive by 31 December 2014.
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ESM completes 2013 funding with EUR 3 billion placement of 10-year bond
On 22 November, trading started in the ten-year benchmark bond, which the European Stability Mechanism (ESM) had placed on 12 November, thereby raising EUR 3 billion to complete its 2013 long-term funding programme. The bond placement met with strong investor interest, with close to EUR 10 billion of orders received from investors worldwide. Goldman Sachs, Natixis and Nomura acted as lead managers for the bond, which has a coupon of 2.125% maturing on 20 November 2023. The euro area accounted for more than half of investors (52%), followed by Asia (27%), and then the UK and Switzerland (17% combined), the rest of Europe (3%) and other countries (1%). Banks accounted for 40% of investors, followed by central banks, governments and sovereign wealth funds (30%), asset managers (19%), insurance and pension funds (5%) and other investors (6%).
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Approval of EU budget by European Parliament clears way for final green light from Council
The European Parliament has voted in favour of the EU's Multiannual Financial Framework (MFF) for the years 2014 to 2020. Consent by the Parliament on 19 November clears the way for final approval of the budget by the Council in the coming weeks. The MFF allows the EU to invest up to EUR 960 billion in commitments (1.00% of the EU’s Gross National Income) and EUR 908.4 billion in payments (0.95% of the EU’s Gross National Income). The EU budget framework gears spending towards sustainable growth, jobs and competitiveness in line with the EU’s Europe 2020 growth strategy. Next year’s budget includes EUR 6.3 billion in payments and EUR 9.3 billion in commitments for the research framework programme Horizon 2020, and EUR 900 million in payments and EUR 3.6 billion in commitments to kick-start the Youth Employment Initiative. President Barroso in his statement following the EP approval said,"I am very pleased that today we are able to show once again: Europe is part of the solution."
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Second round of Transatlantic Trade and Investment Partnership negotiations comes to a successful close
On 15 November, the EU and US concluded the second round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP). Continuing where they left off during the first round in July, negotiators discussed investment rules; trade in services, energy and raw materials; and a range of regulatory issues, including regulatory coherence, technical barriers to trade and sector specific approaches. Talks on public procurement were also held. In addition to the physical meetings in Brussels, meetings were held by video conference to discuss plant health and hygiene measures, intellectual property rights, competition policy and small and medium enterprises. At the end of the week, the EU’s chief negotiator Ignacio García Bercero and his US counterpart Dan Mullaney held a meeting to brief and gather feedback from over 350 EU and US stakeholders representing non-governmental organisations, consumer groups, trade unions, and business and professional organisations. The next round of TTIP talks will take place in Washington DC in the week of 16 December.
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Eurostat estimates trade surpluses of EUR 13.1 billion for euro area and EUR 0.6 billion for EU
Data released on 18 November by Eurostat, the statistical office of the European Union, show trade surpluses for the euro area and EU. An initial estimate of the euro area (EA17) trade in goods balance with the rest of the world in September 2013 shows a EUR 13.1 billion surplus, compared with +8.6 billion in September 2012. The August 2013 balance was +6.9 billion, compared with +5.1 billion in August 2012. The initial estimate for the September 2013 extra-EU28 trade balance was for a EUR 0.6 billion surplus, compared with -14.5 billion in September 2012. In August 2013 the balance was -2.4 billion, compared with -14.5 billion in August 2012. Concerning the total trade of Member States for January to August 2013, the largest surplus was observed in Germany (+EUR 127.8 billion from January through August 2013), followed by the Netherlands (+EUR 36.0 billion), Ireland (+EUR 25.3 billion), Italy (+ EUR 19.3 billion) and Belgium (+EUR 11.4 billion). France (-EUR 50.1 billion) registered the largest deficit, followed by the United Kingdom (-EUR 44.5 billion) and Greece (-EUR 12.9 billion).
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Eurosystem to introduce new €10 banknote in 2014
Over 10 years after the introduction of euro banknotes and coins, the Eurosystem - the European Central Bank (ECB) and the national central banks (NCBs) of the euro area – will unveil a new Europa series €10 banknote on 13 January 2014 and issue the note later in the year. The €10 banknote follows the €5 banknote which entered circulation on 2 May 2013. The Europa series notes have several new and enhanced security features to make them even more resistant to counterfeiting. They include a portrait of Europa – a figure from Greek mythology and the origin of the name of the European continent – in the hologram and the watermark. To support introduction of the new banknotes, a Eurosystem Partnership Programme has been set up for banknote equipment manufacturers and suppliers as well as clients and users of banknote handling machines and authentication devices. The Europa series banknotes will be introduced in ascending order, so the €20 will follow the €10, at a date still to be determined.
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European Parliament adopts EUR 2.3 billion COSME programme to foster competitiveness of SMEs
The European Commission welcomed adoption of the COSME programme by the European Parliament on 21 November. The Programme for the Competitiveness of Small and Medium-sized Enterprises (COSME) aims to ease the problems that small businesses currently face in gaining access to credit. With a budget of EUR 2.3 billion over the period 2014-2020, COSME will, for instance, provide a guarantee facility for loans to small and medium-sized enterprises (SMEs) of up to EUR 150,000. From now through 2020, 330,000 EU SMEs are expected to benefit from this facility. In addition, COSME will improve SMEs’ access to markets inside and outside Europe, provide tailored services and assistance to citizens who wish to become self-employed but currently face difficulties in setting up or developing their own business, and assist Member States in formulating and implementing effective SME related policy reforms.
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Euro exhibition opens in Bydgoszcz (Poland)
After several stops in ten EU countries and five cities in Poland (Łódź, Krakow, Katowice, Olsztyn and Szczecin), the European Commission's travelling euro exhibition has arrived in Bydgoszcz (Poland), its last stop for 2013. The exhibition was opened on 22 November by Małgorzata Zaleska, Member of the Management Board of the National Bank of Poland (NBP) and Zbigniew Gniatkowski, Deputy Head of the European Commission Representation in Poland. The exhibition takes visitors on the road to the euro around two exhibition areas. After presenting EU countries and the main historic steps that led to the adoption of the euro, it focuses on the Economic and Monetary Union and also addresses topical issues, such as the EU response to the sovereign debt crisis and the new EU economic governance framework. The exhibition will stay in Bydgoszcz until the Christmas break. The "euro-tour of Poland" is, however, not over as the exhibition is expected to visit three more cities in 2014: Rzeszów, Gdańsk and Poznań.
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ECFIN publishes “A short guide to the euro” leaflet
A new leaflet, published by the Directorate-General for Economic and Financial Affairs (DG ECFIN) on 28 November, summarises the essential information on Economic and Monetary Union (EMU) and the euro in an easy-to-read and visually attractive format. The publication explains how EMU and the euro came into being, what benefits the euro brings to citizens and businesses, and how the euro is governed. When fully unfolded and turned over the leaflet becomes a full-size poster which can be conveniently displayed to illustrate the key milestones on the way towards the common currency.
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The Economic Adjustment Programme for Portugal. Eighth and Ninth Review. European Economy 164.
A joint mission from the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) met with the Portuguese authorities in Lisbon between 16 September and 3 October 2013 to assess Portugal’s compliance with the terms and conditions of its economic adjustment programme. The report provides a detailed assessment of compliance and summarises the main findings of the mission. The mission concluded that programme implementation is broadly on track. The end-2013 fiscal deficit target of 5.5% of GDP is within reach, and the Portuguese authorities are committed to implementing the fiscal and structural reforms required for sustainable growth. Several economic indicators show signs of recovery and further gains in exports are driving an ongoing external adjustment. Following the approval of the conclusions of this review, EUR 5.6 billion was disbursed under the Economic Adjustment Programme. So far, EUR 77.6 billion has been disbursed, or more than 90% of the total available financial assistance.
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| Directorate-General for Economic and Financial Affairs |
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