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European Commission Economic and Financial Affairs
E-NEWS - Issue 142
In this issue - 15 September 2016
 

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State of the Union Address 2016 by Jean-Claude Juncker, President of the EC © European Union
State of the Union Address 2016: Towards a better Europe - a Europe that protects, empowers and defends

European Commission President Jean-Claude Juncker delivered his 2016 State of the Union address before the European Parliament in Strasbourg on 14 September. Setting out his priorities for the year ahead, the President said: “The next twelve months are decisive if we want to reunite our Union. Europe is a cord of many strands – it only works when we are all pulling in the same direction: EU institutions, national governments and national Parliaments alike. And we have to show again that this is possible, in a selected number of areas where common solutions are most urgent.” Building on the political priorities of the Commission, President Juncker announced a series of major initiatives including a proposal to double the duration and financial capacity of the European Fund for Strategic Investments to spur jobs and growth, and accelerating work on the Capital Markets Union to provide companies with access to diversified sources of financing. The State of the Union speech starts the dialogue with the European Parliament and Council to prepare the Commission Work Programme for the following year.

See also : State of the Union 2016
Viewpoint
European Commission President Jean-Claude Juncker

"We need to deliver a better Europe: a Europe that protects, preserves the European way of life, empowers our citizens, defends at home and abroad, and takes responsibility."

President Jean-Claude Juncker © European Union
More News
European Fund for Strategic Investments: Commission presents plan to double duration and financial capacity

On 14 September, the Commission announced a plan to double the duration and financial capacity of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe. In his 2016 State of the Union address to the European Parliament on 14 September, European Commission President Jean-Claude Juncker emphasised that “Europe must invest strongly in its youth, in its jobseekers, in its start-ups.” Making good on that commitment, the Commission has presented a legal proposal to increase the EFSI pool from EUR 315 billion to at least half a trillion euro in investments and extend the initial three-year period (2015-2018) to 2020. To enhance the firepower of EFSI even further and to reach the aim of doubling the investment target, the Commission is calling on Member States to contribute and is seeking to mobilise an even greater amount of private financing. After just one year in operation, EFSI is already estimated to have mobilised EUR 116 billion across 26 Member States, thus benefiting more than 200,000 small and medium-sized enterprises (SMEs). In related news, the European Investment Fund and EKF Danmarks Eksportkredit  signed  an InnovFin agreement on 15 September to provide DKK 1,250 million (around EUR 167.5 million) in loans to innovative SMEs in Denmark, benefiting from EFSI support.

 
See also : Investment Plan - results so far
Image from the Investment Plan webpage © European Union
Euro area finance ministers review Greece’s progress; discuss spending reviews as a tool for growth-friendly budgets

At their meeting on 8 September, euro area finance ministers were briefed by Greek Minister for Finance, Euclid Tsakalotos on the state of play of the implementation of Greece’s economic adjustment programme. The Greek authorities intend to complete the milestones, agreed in the context of the programme’s first review in a timely manner. These include 15 measures relating to pensions, privatisation, energy, bank governance and the establishment of a revenue agency. The completion of these milestones, together with good progress on the clearance of outstanding arrears, is a condition for a disbursement of EUR 2.8 billion by the European Stability Mechanism. The ministers strongly encouraged the Greek government to speed up the implementation of the milestones, which could help in ensuring a timely start and completion of the second review. In other business, ministers exchanged views on government spending reviews, which are conducted to assess the efficiency and effectiveness of public funds across different categories in a country's budget. The aim is to help Member States achieve more growth-friendly budgets.

See also : Financial assistance to Greece
Jean-Claude Juncker, participated in the 11th G20 Summit in China © European Union
G20 leaders agree on plan to ensure greater inclusiveness

The 2016 G20 Leaders' Summit was held on 4-5 September in Hangzhou, China. The EU was represented by European Commission President Jean-Claude Juncker and European Council President Donald Tusk, as well as Commissioner Moscovici and ECFIN Director-General Marco Buti. The main issue discussed by leaders was how to ensure greater "inclusiveness". G20 leaders adopted a Communiqué that was supported by a package of action plans that address issues including growth, innovation, industrial revolution, and the digital economy. The leaders agreed to promote greater inclusiveness by working to ensure that economic growth serves the needs of everyone and benefits all countries and all people, including women, youth and disadvantaged groups, “so that no one is left behind”. The discussions also covered a wide range of other issues affecting the world economy such as global trade and better financial and economic governance.

See also : International institutions and fora
Computer keyboard with VAT button @ thinkstockphotos
VAT Gap: Nearly EUR 160 billion lost in uncollected revenues in the EU in 2014

A staggering EUR 159.5 billion in Value Added Tax (VAT) revenues were lost across the EU in 2014 according to figures released by the European Commission on 6 September. The Commission’s research shows that the overall difference between the expected VAT revenue and the amount actually collected (the so-called ‘VAT Gap’) amounted once again to an unacceptably high yearly figure. The findings support recent calls by the Commission to overhaul the EU’s VAT system to tackle fraud and make it more efficient. Member States must now follow up on the Commission's Action Plan towards a single VAT area presented last April by agreeing on the way forward towards a definitive VAT regime for cross-border trade in the Union. More immediate measures to tackle the problem of VAT fraud have already been set in motion, but the figures published show that deeper reforms are needed, also because VAT compliance varies widely across the EU.

See also : VAT Gap
blue abstract numbers © thinkstockphotos
GDP up by 0.3% in the euro area and by 0.4% in the EU

Seasonally adjusted GDP rose by 0.3% in the euro area and by 0.4% in the EU during the second quarter of 2016, compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the EU. In the first quarter of 2016, GDP grew by 0.5% in both zones. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.6% in the euro area and by 1.8% in the EU in the second quarter of 2016, after +1.7% and +1.9% respectively in the previous quarter. Among Member States for which data are available for the second quarter of 2016, Romania (+1.5%), Hungary (+1.0%), the Czech Republic, Poland and Slovakia (all +0.9%) recorded the highest growth compared with the previous quarter, while GDP remained stable in France, Italy and Finland. Household final consumption expenditure made a positive contribution to GDP growth in both the euro area and the EU (+0.1 and +0.2 percentage points), while the contribution from gross fixed capital formation was neutral in both zones. The contribution of the external balance to GDP growth was positive for both zones, while the contribution of changes in inventories was negative.

See also : Access to PDF file
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Publications
The 2016 Stability and Convergence Programmes: An Overview and Implications for the Euro Area Fiscal Stance. European Economy. Institutional Papers 34.
The 2016 Stability and Convergence Programmes: An Overview and Implications for the Euro Area Fiscal Stance. European Economy. Institutional Papers 34.
Read more...
Public Investment Stimulus in Surplus Countries and their Euro Area Spillovers. European Economy. Economic Briefs 16.
Public Investment Stimulus in Surplus Countries and their Euro Area Spillovers. European Economy. Economic Briefs 16.
Read more...
What makes a good "Bad Bank"? The IE, ES and DE experience. European Economy. Discussion Papers 36.
What makes a good "Bad Bank"? The IE, ES and DE experience. European Economy. Discussion Papers 36.
Read more...
Fiscal Policy after the Crisis – Workshop Proceedings. European Economy. Discussion Papers 35.
Fiscal Policy after the Crisis – Workshop Proceedings. European Economy. Discussion Papers 35.
Read more...
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Graph of the Week
Graph of the week: What makes a good 'bad bank'

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Selected Speeches
14 September 2016
President Jean-Claude Juncker. State of the Union Address 2016: Towards a better Europe - a Europe that protects, empowers and defends. Speech 16/ 3043 of 14 September.
9 September 2016
Vice-President Valdis Dombrovskis. At the informal ECOFIN press conference: fiscal stabilisation function. Speech 16/ 3005 of 9 September.
8 September 2016
Vice-President Valdis Dombrovskis. At the Eurofi Financial Forum 2016, Bratislava. Speech 16/ 2993 of 8 September.
4 September 2016
President Jean-Claude Juncker. Opening remarks ahead of the G20 Summit at the joint press conference with Donald Tusk, President of the European Council, in Hangzhou, China. Speech 16/2946 of 4 Septem
Classifieds
15 September 2016
Feedback. Framework for resolution of financial institutions other than banks
15 September 2016
Feedback. Corporate Tax Transparency
AGENDA
16 September
Bratislava, Slovak Republic
Informal meeting of the 27 Heads of State or Government
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
7-8 November
Brussels
Eurogroup/ECFOFIN meetings
date to be confirmed
Brussels
Autumn economic forecast
date to be confirmed
Brussels
European Semester: Annual Growth Survey 2017
21-24 November
Strasbourg
European Parliament Plenary
5-6 December
Brussels
Eurogroup/ECFOFIN meetings
8 December
Germany
ECB Governing Council meeting Frankfurt
12-15 December
Strasbourg
European Parliament Plenary
15-16 December
Brussels
European Council
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