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Top stories
 Ireland has made important progress on fiscal, economic and structural reforms

Press conference for last Troika review in October 2011: left to right, Barbara Nolan (EU Commission), Klaus Masuch (ECB), Istvan Szekely (EU Commission) and Ajai Chopra (IMF)This week, the European Commission published its staff assessment following the fourth review of the EU and IMF-supported financial assistance programme for Ireland, carried out in Dublin from 11 to 20 October 2011. The report concludes that important progress has been made in the areas of fiscal consolidation, strengthening of the domestic financial sector and growth-enhancing structural reforms, as requested by the Council of Ministers (implementing Decision 2011/77/EU). This paves the way for the third installment of €4.2 billion in European funding to Ireland in January 2012.

So far this year, fiscal performance has been on target and the budget deficit for 2011 as a whole is now projected to be well below the 10.6% of GDP ceiling, as required in the programme. 

 
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 European Council decisions: Decisive steps towards more discipline, integration and convergence

President Barroso with Taoiseach Enda Kenny at last week's European CouncilAt the European Council meeting of 8-9 December, 26 out of 27 member states decided on a strong response to the immediate crisis and on opening the way to an intergovernmental treaty for greater integration, discipline and convergence. The new treaty should ensure the respect of the EU's newly tightened rules on debt and deficits.

EU leaders also agreed to fast-track measures already on the table for more discipline and stability and others that boost jobs and growth.

On debt and deficit, the decisions taken further strengthen the already massively reinforced framework for budgetary discipline and economic policy coordination in the euro area, notably the reinforced Stability and Growth Pact and the new macro-economic surveillance which entered into force on 13 December. The European Council also has called on the Council and Parliament to fast-track agreement on the two Article 136 Regulations proposed by the Commission in November, which will further enhance ex ante fiscal surveillance and the solidity and credibility of budgetary processes in the euro area – so that they enter into force in time for the 2012 budgetary cycle. On top of this, the participating countries, up to 26, will sign an intergovernmental treaty in which they will enshrine their further commitments to:

  • support recommendations the Commission makes in the framework of the Excessive Deficit Procedure, leading to greater automaticity;
  • adopt a balanced budget rule at constitutional or equivalent level, and recognise the jurisdiction of the Court of Justice to verify its transposition;
  • On the financial stability of the euro area, the European Council also sent a strong signal to investors of their commitment to defend the euro.

They agreed that:

  • the European Stability Mechanism (ESM) should enter into force in July 2012 instead of July 2013
  • private sector involvement in the Greek debt reduction programme will remain a unique one-off case and the ESM's clause on PSI will be kept to the preamble and will be fully in line with IMF principles and practises
  • urgent decisions in the ESM can be taken by qualified majority.
  • the adequacy of the combined ceiling for the EFSF and ESM of €500bn will be reassessed in March 2012
  • euro area and other member states will confirm in 10 days whether they can provide up to €200bn in additional resources to the IMF, through bilateral loans, to ensure it has adequate resources to deal with the crisis.
 
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 Dublin: Old and Young in a 2012 Calendar for EY2012

From left to right the three prize winners: Emily Leonard, Padraig Enright and Aisling Mc ConnellThe European Commission Representation in Dublin yesterday (Wednesday) hosted the final of a photography competition for Irish primary schools on the European Year for Active Ageing and Solidarity between Generations 2012. The top three photographers each won a digital camera and the overall winner, 11-year-old Padraig Enright from Co Kerry, also received a camera for his school. Padraig's winning photo entitled 'Sharing the music' shows him playing music with an elderly friend near his home in .

This competition is part of the European Year for Active Ageing 2012 which seeks to give older people the chance to participate fully in society, promote job opportunities and volunteer work for older people and to enable them to live independently while taking an active part in their communities and contributing to community life.

 
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 21% of Irish persons aged 16-74 have never used the internet

Downloading musicFor many people today it seems difficult to live without the internet, however a decreasing, but still non-negligible, part of the EU population has never used it. According to figures released yesterday by Eurostat, 24% of people across the EU aged 16-74 and 21% of Irish people (down from 42% in 2006) in the same age bracket have never used the internet. Within the EU, Sweden has the lowest number of people who have never used the internet at 5% and Romania the highest at 54%.

In the first quarter of 2011, 78% of Irish households had access to the internet, compared with half in the first quarter of 2006. In the EU27, 73% of households had internet access compared to 49% in the first quarter of 2006. Household internet access in the EU in 2011 varied from 94% in the Netherlands to 45% in Bulgaria.

The share of Irish households with broadband internet connections rose from 13% in 2006 to 65% in 2011, a little below the EU average of 68%. Sweden had the highest rate of broadband internet connection at 86% and Romania the lowest at 31%.

 
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 Vehicle noise to be reduced

Busy motorwayA new proposal, adopted by the European Commission last week, aims to further improve the quality of life for all Europeans. It proposes new measures to reduce noise produced by cars, vans, buses, coaches, light and heavy trucks.

Noise limit values would be lowered in two steps each of 2 dB(A) for passenger cars, vans, buses and coaches. For trucks the reduction would be 1 dB(A) in the first step and 2 dB(A) in the second step.

The first step is to apply two years after the publication of the text once approved by the European Parliament and Member States and the second step is foreseen three years thereafter. Today’s proposal will reduce vehicle noise nuisance by some 25%. 

The World Health Organisation concluded that traffic related noise may account for 1 million healthy years of life lost per year in Western Europe. Hence, reduction of traffic noise is essential to improve the health and quality of life of Europe's citizens. 

 
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 Irish GDP per capita third highest in Europe in 2010 but AIC per capita just above EU average

Shoppers on Grafton StreetAccording to figures recently released by Eurostat, in 2010 Ireland had the third highest GDP per capita in the EU, expressed in purchasing power standards (PPS), at 128%. Luxembourg had the highest rate of GDP at 271%, followed by the Netherlands at 133%. GDP was lowest in Bulgaria at 44%.

However, the rate of Active Individual Consumption (AIC) per capita expressed in PPS in Ireland was only a little above the EU average at 102% in 2010, down from 109% in 2008. For the EU as a whole, AIC per capita expressed in PPS ranged from 150% in Luxembourg to 42% in Bulgaria. Actual Individual Consumption (AIC) per capita is an alternative welfare indicator considered to be better adapted to reflect the situation of households.

Ireland's Gross National Income (GNI) per capita expressed in Purchasing Power Standards (PPS) was also a lot lower than its GDP at 105.6% in 2010, down from 115.5% in 2008. Across the EU, GNI varied from 42.7% (Bulgaria) to 192.7% (Luxembourg) in 2010.

 
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News in brief
 Accession treaty with Croatia signed

Image of Croatian cityThe Treaty of Accession with Croatia was signed at a special ceremony held in Brussels on the margins of the European Council last weekend. The signing of the Treaty of Accession paves the way for the ratification procedures that will allow Croatia to become the 28th member of the European Union on 1 July 2013.

When ratification is complete, the Irish protocols to the Lisbon Treaty will also take effect.

 
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 European Parliament supports ban of phosphates in consumer detergents

The European Commission welcomes the adoption by the European Parliament of the proposal to ban the use of phosphates and to limit the content of other phosphorous containing compounds in consumer laundry detergents as of 30 June 2013.

Similar restrictions will apply to automatic dishwasher detergents for consumers as of 1 January 2017. When excessively discharged into water, phosphates cause algae to grow at the expense of other aquatic life.

 
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 A Single Permit and a clear set of rights for legal migrant workers

Employment agencyEarlier this week the European Parliament adopted the so-called Single Permit Directive. The new legislation will simplify migration procedures and ensure that workers from countries outside the EU, legally residing in a Member State, will enjoy a common set of rights on equal footing with nationals. Member States will have two years to implement the provisions of the Directive into their national legislation. 

 
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 Fair trial rights: Suspects to receive a 'letter of rights' in criminal proceedings following European Parliament vote

Suspects in the European Union will soon receive a ‘letter of rights’ listing their basic rights during criminal proceedings following a vote earlier this week in the European Parliament. The measure is part of the Commission's efforts to bolster fair trial rights EU-wide and improve mutual trust amongst judicial authorities. Following the Parliament's endorsement, the measure will now pass to ministers for final adoption by the Council in the coming weeks before becoming law.

The new law will make sure any suspects of a criminal offence receive adequate information about their basic rights during criminal proceedings. These are the right to a lawyer; to be informed of the charge; to interpretation and translation for those who do not understand the language of the proceedings; the right to remain silent and to be brought promptly before a court following arrest.

 
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 Money transferred by migrants to their country of origin up by 3% to 31 bn euro in 2010

Migrants living and working in Ireland sent home €516 million in 2010, of which €416 million went back to other EU countries. Migrants working in Spain sent home the highest amount in 2010 (€7.2 bn or 23% of total EU27 remittances), followed by Italy (€6.6 bn or 21%), Germany (€3.0 bn or 10%), France (€2.9 bn or 9%), the Netherlands (€1.5 bn or 5%) and Greece (€1.1 bn or 3%). Ireland was different to most other EU countries in that most of the money sent home by migrants living here went back to other EU countries. For the EU as a whole €31.2 bn was sent back by migrants in 2010 of which €22.3 bn went to non-EU countries.

 
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 Significant boost in EU support for the environment and climate through the new LIFE programme

LIFE logoThe Commission proposes to allocate EUR 3.2 billion over 2014-2020 to a new Programme for the Environment and Climate Action - LIFE. The proposed new programme will build on the success of the existing LIFE+ Programme but will be reformed to have a greater impact, be simpler and more flexible and have a significantly increased budget.

New aspects of the future LIFE Programme include:

  • Creation of a new sub-programme for Climate Action; 
  • Clearer definition of priorities with multi-annual work programmes adopted in consultation with the Member States; 
  • New possibilities to implement programmes on a larger scale through "Integrated projects" which can help mobilise other EU, national and private funds for environmental or climate objectives.

Grants to finance projects will remain the Programme's main type of intervention. Operating grants for NGOs and other bodies will still be possible, and there will also be scope for contributions to innovative financial instruments.

 
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Agenda
 Agenda

Today (Thursday 15) – Friday 16 December: Agriculture and Fisheries Council, Brussels

- 19 December: Exhibition on 'Croatian Archaeological Heritage', European Union House, Dublin

-  15 March 2012: Irish Successes Abroad exhibition travels around the country

Friday 16 December: General Affairs Council, Brussels

Monday 19 December: Environment Council, Brussels

Monday 19 December: Governing Council of the European Central Bank, Frankfurt

Tuesday 20 December: Poetry event: ‘Readings of Milosz’ with Irish Nobel laureate Seamus Heaney, European Union House, Dublin

 
 
 
 
 
Public consultations
 Public consultation on measures to break down barriers to disabled people

The European Commission launched on 13 December a public consultation on its future plans for breaking down barriers to Europeans with disabilities. The consultation will help the Commission to prepare its proposals for a European Accessibility Act, planned for autumn 2012.

The initiative aims to ensure that people with disabilities have access, on an equal basis with others, to the physical environment, to transport and to information and communication services. It will also benefit people with limited mobility, such as the elderly.

The consultation – itself fully accessible – is aimed at gathering views from businesses, people with disabilities and the general public and will remain open until 29 February 2012.

 
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 Public consultation on the future of LED lighting in Europe

The European Commission today (Thursday) adopted a Green Paper and launched a public consultation on the future of LED-based lighting. LED lighting is one of the most energy-efficient and versatile forms of lighting - saving up to 70% energy and money compared to other lighting technologies. Faster LED deployment will ensure the success of Europe's lighting industry and help reduce energy use from lighting by 20% by 2020.

But Europe also faces a number of challenges and more input is needed from citizens and businesses to refine the policy. To this end a consultation will run until 29 February 2012 to collect feedback on the Commission's ideas.

LED lighting faces a number of challenges in the market: high purchase prices because it is a more sophisticated technology compared to the alternatives, lack of familiarity among potential users and a lack of common standards.

 
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Job opportunities
 Reminder: Closing date for Open Competition for Secretaries (AST 1) having English or Irish as a main language

The closing date for online registration for Open Competition (EPSO/AST/117/11) for Secretaries (AST 1) having Greek, English, Estonian, Finnish, French, Irish, Hungarian or Italian as a main language is 20 December 2011.

 
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 Open Competition for Assistants in the fields of financial management/accounting, communication and project management

The European Personnel Selection Office is organising an open competition to select assistants (EPSO/AST/118/11 – Assistants (AST 3)) to work in the institutions of the European Union in the following fields:

  • Financial Management / Accounting 
  • Communication 
  • Project Management / Programme Management / Contract Management  

Applicants must have at least 3 years of professional experience in the field chosen after having obtained a post-secondary diploma (for field 1: a diploma in finance or accounting; for field 2: a diploma in communication, media studies, journalism or public relations; no particular specifications for field 3 );

OR have at least 6 years of relevant professional experience in the chosen field after having completed secondary education.

The closing date for online registration is midday (Brussels time – CET) on 17 January 2012.

 
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Calls for tender/proposals
 Call for Tenders for broadcast services to provide EU-related news for local and community radio stations in Ireland

The European Commission Representation in Ireland is organising a public procurement entitled: "broadcast services to provide EU-related news for local and community radio stations in Ireland".

The economic operators are invited to refer to the contract notice n° 2011/S 239-385698 published in the Official Journal, on 13 December 2011.

The deadline for the submission of the offers is 31 January 2012.

 
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Spotlight on: Economic Governance
 EU Economic governance: Six-Pack enters into force

Vice-President Olli Rehn speaking at Monday's press conferenceOn 13 December 2011, the reinforced Stability and Growth Pact (SGP) enters into force with a new set of rules for economic and fiscal surveillance. These new measures, the so-called "Six-Pack", are made of five regulations and one directive proposed by the European Commission and approved by all 27 Member States and the European Parliament last October.

This change represents the most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the Economic Monetary Union almost 20 years ago. In line with 8-9 December European Summit agreements, the legislative package already brings a concrete and decisive step towards ensuring fiscal discipline, helping to stabilise the EU economy and preventing a new crisis in the EU.

The economic and financial crisis exacerbated the pressure on the public finances of EU Member States. Today, 23 out of the 27 Member States are in the so-called “excessive deficit procedure” (EDP), a mechanism established in the EU Treaties obliging countries to keep their budget deficits below 3% of GDP and government debt below (or sufficiently declining towards) 60% of GDP. Member States currently in excessive deficit procedure must comply with the recommendations and deadlines decided by the EU Council to correct their excessive deficit.

The European Parliament and the Council adopted a package of six new legislative acts, upon a proposal by the European Commission and which will come into force on 13 December 2011. It represents a major step towards economic stability, restoring confidence and preventing future crises in the euro area and the EU.

Deficit

From 13 December 2011 onwards, financial sanctions will apply to euro area Member States that do not take adequate action. Member States currently in excessive deficit procedure should comply with the specific recommendations the Council addressed to them to correct their excessive deficit. In case a euro area Member States does not respect its obligations, a financial sanction can be imposed by the Council on the basis of a Commission recommendation, unless a qualified majority of Member States vote against it. This is the so-called “reverse qualified majority” voting procedure*, which makes the enforcement of the rules stricter and more automatic, therefore more dissuasive and credible. Such a financial sanction can be activated at any moment after 13 December, if and when the conditions are met.
 
Public debt

The new rules of the amended Stability and Growth Pact make the debt criterion of the Treaty absolutely operational, since it has been largely neglected over the past years. Another major element of the new rules is that a new numerical debt benchmark has been defined: if the 60% reference for the debt-to-GDP ratio is not respected, the Member State concerned will be put in excessive deficit procedure (even if its deficit is below 3%!), after taking into account all relevant factors and the impact of the economic cycle, if the gap between its debt level and the 60% reference is not reduced by 1/20th annually (on average over 3 years).

Given that that most Member States are already in excessive deficit procedure, and therefore have to comply with agreed fiscal consolidation paths, a transitional period is foreseen in the amended legislation to ensure no abrupt change in these agreed paths. Accordingly, each Member State in excessive deficit procedure is granted a three-year period following the correction of the excessive deficit for meeting the debt rule. This does not mean that the debt rule does not apply at all during this period as the amended Regulation foresees that Member States should make sufficient progress towards compliance during this transitional period. A negative assessment of the progress made towards compliance with the debt benchmark during the transition period could lead to the opening of an excessive deficit procedure. Sufficient progress towards compliance with the debt rule should start on 13 December 2011, depending on country-specific deadlines for correction of their excessive deficit.

The expenditure benchmark under the preventive arm of the Pact

The preventive arm of the Stability and Growth Pact guides Member States towards a country-specific, medium-term budgetary objective (MTO) which sets out to ensure public finance sustainability. The new rules define a new 'expenditure benchmark' to help assess progress towards these MTOs. This expenditure benchmark places a cap on the annual growth of public expenditure according to a medium-term rate of growth. For Member States that have not yet reached their MTO, the rate of growth of expenditure should be below this reference rate in order to ensure adequate progress.

This new instrument will improve the budgetary planning and outcomes of Member States by ensuring that expenditure plans are adequately resourced by equivalent permanent revenues. However, it does not constrain, in any way, the level of public expenditure, as long as it is financed effectively.

The provisions of the preventive arm of the Pact provide the main guidance for budgetary planning and budgetary execution by Member States when they are not subject to an excessive deficit procedure. Today, this is only the case for Estonia, Finland, Luxembourg and Sweden. All the other EU member States are in the corrective arm.

Effective enforcement of the rules is as important as the rules themselves. This equally applies to the preventive arm. The amended Stability and Growth Pact allows stronger action when the budgetary execution of a Member State deviates significantly. In order to enforce this rule, deviations have been quantified and can lead to a financial sanction (an interest-bearing deposit of 0.2% of GDP as a rule) in case of continuous non-correction.  Such a sanction is proposed by the Commission and adopted by “reverse qualified majority” voting in the Council.
 
Furthermore, if its budgetary plans do not comply with the provisions of the preventive arm, a Member State can be requested to present new plans that do comply. Member States not in EDP will have to demonstrate compliance with the provisions of the preventive arm in their next stability or convergence programmes as of next Spring 2012, in the context of the European Semester. Member States under EDP should show compliance after the correction of their excessive deficit.

Reducing macro-economic imbalances

Over the past decade, the EU has registered serious gaps in competitiveness and major macroeconomic imbalances. A new surveillance and enforcement mechanism has been set up to identify and correct such issues much earlier: the Excessive Imbalances Procedure (EIP), based on Article 121.6 of the Treaty. It will rely on the following main elements:

  • Preventive and corrective action: The new procedure allows the Commission and the Council to adopt preventive recommendations under article 121.2 of the Treaty at an early stage before the imbalances become large. In more serious cases, there is also a corrective arm where an excessive imbalance procedure can be opened for a Member State. In this case, the Member State concerned will have to submit a corrective action plan with a clear roadmap and deadlines for implementing corrective action. Surveillance will be stepped up by the Commission on the basis of regular progress reports submitted by the Member States concerned. 
  • Rigorous enforcement: A new enforcement regime is established for euro area countries. It consists of a two-step approach whereby an interest-bearing deposit can be imposed after one failure to comply with the recommended corrective action. After a second compliance failure, this interest-bearing deposit can be converted into a fine (up to 0.1% of GDP).  Sanctions can also be imposed for failing twice to submit a sufficient corrective action plan. The decision-making process in the new regulations is streamlined by prescribing the use of reverse qualified majority voting to take all the relevant decisions leading up to sanctions. This semi-automatic decision-making procedure makes it very difficult for Member States to form a blocking majority.
  • An early warning system: an alert system is established based on an economic reading of a scoreboard consisting of a set of ten indicators covering the major sources of macro-economic imbalances. The composition of the scoreboard indicators may evolve over time.  The aim of the scoreboard is to trigger in-depth studies which will do deep dive analyses to determine whether the potential imbalances identified in the early-warning system are benign or problematic. The Commission can organise missions, with the ECB if appropriate, to conduct the in-depth reviews which shall be made public. 

Planned scoreboard

  • 3 year backward moving average of the current account balance as a percent of GDP, with the a threshold of +6% of GDP and - 4% of GDP;
  • net international investment position as a percent of GDP, with a threshold of -35% of GDP;
  • 5 years percentage change of export market shares measured in values, with a threshold of -6%;
  • 3 years percentage change in nominal unit labour cost, with thresholds of +9% for euro-area countries and +12% for non-euro-area countries. 
  • 3 years percentage change of the real effective exchange rates based on HICP/CPI deflators, relative to 35 other industrial countries, with thresholds of -/+5% for euro-area countries and -/+11% for non-euro-area countries;
  • private sector debt in % of GDP with a threshold of 160%;
  • private sector credit flow in % of GDP with a threshold of 15%; 
  • year-on-year changes in house prices relative to a Eurostat consumption deflator, with a threshold of 6%; 
  • general government sector debt in % of GDP with a threshold of 60%;
  • 3-year backward moving average of unemployment rate, with the threshold of 10%.

More information:
MEMO/11/364
MEMO/11/627

 
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