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European Commission Economic and Financial Affairs
E-NEWS - Issue 141
In this issue - 08 July 2016
 

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Joint press conference by Valdis Dombrovskis and Pierre Moscovici © European Union
Stability and Growth Pact: update on the fiscal situation of Spain and Portugal

Despite considerable efforts, Spain and Portugal have not done enough to correct their excessive deficits, the Commission said on 7 July in a recommendation to EU finance ministers. If the council adopts the recommendation, the Commission will be legally obliged to present within 20 days a proposal for a fine and a partial suspension of EU Structural and Investment Funds. The Commission, may, however recommend a reduced fine, or cancel it all together, on the grounds of exceptional economic circumstances, or if the Member States concerned submit a ‘reasoned request’ within 10 days of the council’s decision. As regards the structural and investment funds, the Commission is legally required to propose a partial suspension for the following year. This could be lifted once the Commission considers that the Member States are again fully compliant with the Stability and Growth Pact. Both Spain and Portugal will require new deadlines to correct their excessive deficits and the Commission will propose a new fiscal adjustment path for each country at a subsequent stage. The Commission stands ready to work with the Spanish and Portuguese authorities to define the best path ahead and will continue to apply the Stability and Growth Pact rules, in an intelligent way.

 

See also:

Policy and surveillance Spain

Policy and surveillance Portugal

Viewpoint
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs

“The Commission has always acted, is acting now and will continue to act within the rules of the Stability and Growth Pact. These are complex but intelligent rules that must be applied in an intelligent way by the Commission and the Council. We will work with Spain and Portugal to reach a shared understanding of the policy commitments that should be made."

More News
Tax Avoidance and Legislation © Thinkstock
Commission strengthens transparency rules to tackle terrorism financing, tax avoidance and money laundering

The Commission has adopted a proposal to further reinforce EU rules on anti-money laundering in order to counter terrorist financing and increase transparency about who really owns companies and trusts. The changes proposed on 5 July will tackle new means of terrorist financing linked to virtual currencies and the use of anonymous pre-paid instruments such as pre-paid cards. They will also enhance the powers of EU Financial Intelligence Units and facilitate their cooperation, as well as provide for stronger checks on risky third countries. Stricter transparency rules to prevent tax avoidance and money laundering include mandating full public access to the beneficial ownership registers on companies and business-related trusts, and extending due diligence controls. This Commission proposal is the first initiative to implement the Action Plan of February 2016 for strengthening the fight against terrorist financing and is also part of a broader drive to boost tax transparency and tackle tax abuse. The Commission released, in parallel, a Communication that responds to the recent Panama Papers revelations.

See also : The fight against tax fraud and tax evasion
Family photo © European Union
2016 European Semester: EU leaders endorse country-specific recommendations

On 28 June, the European Council of EU leaders generally endorsed the country-specific recommendations (CSRs) as approved by the Council. Upon formal adoption by the Council, this allows the conclusion of the 2016 European Semester, the EU’s annual policy monitoring process. The 2016 CSRs, which the Commission published on 18 May, set out the Commission’s economic policy guidance for individual Member States for the next 12 to 18 months. In addition to efforts the Commission already identified in November 2015 at the Euro area level, and the Council adopted in March, the guidance focused on priority reforms to strengthen the recovery of Member States’ economies by boosting investment, implementing structural reforms and pursuing fiscal responsibility. The CSRs are to be formally adopted by the Council on 12 July, thus concluding the 2016 European Semester. The European Council also called for the different Single Market strategies and action plans proposed by the Commission to be completed and implemented by 2018. Referring to the outcome of the referendum in the UK, the European Council expressed regret, but also respect for the will of the majority of the British people.

See also : European Council conclusions, 28 June 2016
Image from the Macro-Financial Assistance video © European Union
Commission proposes EUR 200 million in assistance for Jordan

Following a request by the Jordanian government, the European Commission has proposed additional Macro-Financial Assistance (MFA) to Jordan of up to EUR 200 million in medium-term loans at favourable financing conditions. The assistance, which was announced on 29 June, is part of a wider effort by the EU and other international donors to help Jordan and other countries in the region mitigate the economic and social impact stemming from regional conflicts and the presence of a large number of Syrian refugees in the country. The EU MFA will help Jordan cover its external financing needs in 2016 and 2017, while supporting reform measures aimed at strengthening the balance of payments and budgetary position, improving the investment climate and fostering economic integration and regulatory convergence with the EU. The ultimate aim is to help Jordan lay the conditions for economic growth that will benefit both Jordanians and the Syrian and other refugees living in Jordan. The European Parliament and the Council need to approve the new MFA programme before disbursements could start later this year. A short video released on that occasion summarises the key principles of MFA and the reasons why the EU provides it.

See also : Jordan
Fake euro coins © iStockphoto
Protection of euro banknotes and coins from being counterfeited: Commission reports on the Pericles programme

A report addressed to the European Parliament and the Council and adopted by the Commission on 27 June reviews the results of the “Pericles 2020” programme for the protection of the euro against counterfeiting. "Pericles 2020" is an exchange, assistance and training programme for the protection of euro banknotes and coins against counterfeiting with an annual budget of around one million euro. In 2015, the programme funded 12 projects, including seminars, technical training and staff exchanges. Participants included representatives from the police, judiciary, national central banks, mints and customs. The Commission and the European Central Bank work together to protect euro notes and coins in close cooperation with Europol and Interpol. Moreover, the EU is increasingly cooperating with third countries outside Europe such as China, as well as countries in Latin America, the south east of Europe, and the Mediterranean region. A video released on 30 June explains how the European Union is working to protect euro banknotes and coins from being counterfeited. In related news, the European Central Bank on 5 July unveiled the new €50 banknote, the most widely used note, scheduled for circulation as of April 2017. The new banknote forms part of the second series of euro banknotes with enhanced security features, known as the Europa series.

See also : 'Pericles 2020' Programme
Image from the Investment Plan webpage © European Union
Investment Plan: EIB provides EUR 50 million to Aperam; EIF signs EUR 80 million agreement with Banca Sella to benefit innovative Italian SMEs

The European Investment Bank (EIB) and Aperam have concluded a EUR 50 million financing contract for the purpose of financing a research and development programme in France over the period 2016-2019 as well as the upgrade of two plants. This project was funded under the Investment Plan for Europe. In Italy, the European Investment Fund (EIF) and Banca Sella S.p.A. (Banca Sella) signed an InnovFin agreement on 30 June that will enable Banca Sella to provide finance to SMEs and small mid-caps in Italy over the next 2 years under Horizon 2020, the EU Framework Programme for Research and Innovation. The EU support for innovative Italian companies is expected to generate a portfolio of EUR 80 million in loans. As of June 2016, the EIB Group – the European Investment Bank and the European Investment Fund – had approved nearly EUR 18 billion of new financing backed by EFSI guarantees from the EU budget. This financing is expected to trigger total investment worth more than EUR 106 billion, or approximately 34% of the final target of EUR 315 billion.

See also : Investment Plan
Greek and Cyprus Flag © Thinkstock
Commission proposes to maintain 85% EU co-financing rate for Cyprus and to extend "top-up" mechanism for Greece

To ensure a smooth transition after Cyprus’ successful exit from its economic programme and to give an additional boost to investments, the Commission has proposed to extend the maximum EU co-financing rate of 85% on European Structural and Investment (ESI) funds for Cyprus until the end of the 2014-2020 programming period. The measure proposed on 27 June would relieve the Cypriot budget by EUR 99 million. The Commission has also proposed to extend eligibility for the “top-up” mechanism beyond June 2016, to help bring Greece back on the path to sustained growth. The top-up mechanism allows countries under stability support programmes to benefit from a temporary increase in payments by 10% (the "top-up"). This results in an immediate easing of budgetary pressure and provides more liquidity to kick-start investments. From 2011 to 2015, thanks to this provision, Greece already received EUR 1.3 billion earlier than planned, and this allowed EU co-financed projects to get off the ground quicker. This proposal now has to be approved by the European Parliament and Council.

See also : New Commission proposal helps Cyprus and Greece
UK Flag © Thinkstock
Commission explains process for negotiating UK exit from EU; Lord Hill to be replaced by Valdis Dombrovskis

In response to the outcome of the UK Referendum, the Commission on 24 June noted that proceedings under Article 50 of the Treaty on European Union will have to be launched and that the terms of the UK Settlement agreed at the European Council of 18-19 February 2016 have ceased to exist. During negotiations under Article 50, European Union Treaties and law will continue to apply to the UK. If no agreement is reached within 2 years of the UK activating Article 50, the UK would leave the EU without any new agreement being in place. Any negotiated agreement would need to be adopted by a qualified majority of 72% of the remaining 27 Member States, and would need to be approved by a simple majority of the European Parliament. In other news, Commissioner Lord Hill, responsible for Financial Stability, Financial Services and the Capital Markets Union, has informed European Commission President Juncker of his decision to resign from his post. President Juncker on 25 June asked Valdis Dombrovskis, Vice-President responsible for the Euro and Social Dialogue, to take over the portfolio as of 16 July. President Juncker thanked the UK Task Force, which has now been dissolved, for its work related to the referendum.

See also : United Kingdom
College visit © European Union
College of Commissioners travels to Bratislava to meet with the Slovak Presidency of the Council of the EU

On 30 June and 1 July, the College of Commissioners travelled to Bratislava for its traditional visit to the incoming Presidency of the Council of the European Union, which in the second semester of 2016 will be held by the Slovak Republic. President Juncker and the Commission Members met with Andrej Kiska, President of the Slovak Republic, and with Robert Fico, Prime Minister of the Slovak Republic, and discussed the priorities of the Slovak Presidency during a plenary session with the Slovak government. They also met with Andrej Danko, President of the National Council of the Slovak Republic, and engaged in four cluster meetings with members of the Slovak government, grouped around the themes: external relations, security, migration and justice; energy and climate policy, transport and natural resources; growth, competitiveness and internal market; and the EU Budget, Economic and Monetary Union, and the social agenda. During a plenary meeting of the National Council – the Slovak Parliament – the Commissioners discussed current EU challenges such as migration, Schengen, the European Neighbourhood Policy, and the Energy Union and energy security.

See also : SK EU 2016
Job computer key © iStockphoto
Euro area unemployment at 10.1%; EU at 8.6%

According to figures published by Eurostat, the EU statistical office, the euro area seasonally-adjusted unemployment rate was 10.1% in May 2016, down from 10.2% in April 2016 and from 11.0% in May 2015. This is the lowest rate recorded in the euro area since July 2011. The EU unemployment rate was 8.6% in May 2016, down from 8.7% in April 2016 and from 9.6% in May 2015. This is the lowest rate recorded in the EU since March 2009. Eurostat estimates that 21,084 million men and women in the EU, of whom 16,267 million were in the euro area, were unemployed in May 2016. Compared with April 2016, the number of persons unemployed decreased by 96,000 in the EU and by 112,000 in the euro area. Compared with May 2015, unemployment fell by 2.7 million in the EU and by 1.4 million in the euro area. Among the Member States, the lowest unemployment rates in May 2016 were recorded in the Czech Republic (4.0%), Malta (4.1%) and Germany (4.2%). The highest unemployment rates were observed in Greece (24.1% in March 2016) and Spain (19.8%).

See also : May 2016-Euro area unemployment
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Publications
The Danish labour
The Danish labour market performance and challenges. European Economy. Economic Briefs 13.
This economic brief takes a close look at the Danish labour market during the crisis and its current challenges.
Read more...
Composition Matters: Fiscal Consolidation and Economic Growth in the Czech Republic (2010-2013). European Economy. Economic Briefs 12.
A look at fiscal consolidation in the Czech Republic between 2010 and 2013 and at the impact that different policy mixes can have on growth.
Read more...
Enhancing the innovative capacity of the Polish economy. European Economy. Economic Briefs 14.
This study focuses on Poland’s performance in innovation and identifies potential policy actions to enhance it.
Read more...
2016 Economic Reform Programmes of Albania, The former Yugoslav Republic of Macedonia, Montenegro, Serbia, Turkey, Bosnia and Herzegovina and Kosovo*: The Commission's overview and country assessment
The document contains the Commission's assessments of the 2016 Economic Reform Programmes (ERP) of candidate countries and potential candidates.
Read more...
European Business Cycle Indicators – 2nd Quarter 2016
The special topic of this edition of the EBCI proposes a new approach to measuring inequality, making use of the European Commission's qualitative consumer survey data.
Read more...
Related: EU Employment and Social Situation Quarterly.
The review confirms an increase of the overall employment rate, for both the EU and the euro area – an increase representing 3 million more employed people in the EU than one year before.
Read more...
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Graph of the Week
A closer look at flexicurity in the labour market – Denmark's experience

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Selected Speeches
6 July 2016
Vice President Valdis Dombrovskis. Opening statement at the consultation with the European Parliament's Committee on Economic and Monetary Affairs. Speech 162428/ of 6 July.
5 July 2016
Commissioner Pierre Moscovici. Press conference at the launch of the new transparency rules to tackle terrorism financing, tax avoidance and money laundering. Speech 16/2417 of 5 July.
5 July 2016
President Jean-Claude Juncker. EP Plenary session on the conclusions of the European Council meeting of 28 June 2016 and the Informal meeting of the 27 Heads of State or Government of 29 June 2016. Sp
28 June 2016
President Jean-Claude Juncker. EP Plenary session of the European Parliament on the result of the referendum in the United Kingdom. Speech 16/2324 of 28 June.
23 July 2016
Commissioner Jonathan Hill, At the Pensions Europe Conference 2016. Speech 16/2324 of 23 June.
Classifieds
6 July 2016
Feedback. Blueprint of the EU Customs Union governance reform.
6 July 2016
Feedback. Framework for resolution of financial institutions other than banks
6 July 2016
Feedback. Corporate Tax Transparency
6 July 2016
Feedback. Blueprint of the EU Customs Union governance reform.
AGENDA
11-12 July
Brussels
Eurogroup/ECFOFIN meetings
21 July
Germany
ECB Governing Council meeting Frankfurt
23-24 July
Chengdu, China
G20 Finance Ministers and Central Bank Governors meeting
4–5 September
Hangzhou, China
G20 Summit
8 September
Germany
ECB Governing Council meeting Frankfurt
9-10 September
Brussels
Eurogroup/ECFOFIN meetings
12-15 September
Strasbourg
European Parliament Plenary
3-6 October
Strasbourg
European Parliament Plenary
20-21 October
Brussels
European Council
20 October
Germany
ECB Governing Council meeting Frankfurt
24-27 October
Strasbourg
European Parliament Plenary
date to be confirmed
Brussels
Autumn economic forecast
21-24 November
Strasbourg
European Parliament Plenary
5-6 December
Brussels
Eurogroup/ECFOFIN meetings
8 December
Germany
ECB Governing Council meeting Frankfurt
7-8 November
Brussels
Eurogroup/ECFOFIN meetings
12-15 December
Strasbourg
European Parliament Plenary
15-16 December
Brussels
European Council
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