If you have trouble reading this e-mail read the online version
European Commission Economic and Financial Affairs
E-NEWS - Issue 152
In this issue - 02 March 2017

follow us :          icon RSS  icon Twitter  icon Facebook    
Top story
Jean-Claude Juncker, President of the EC, presents the White Paper on the Future of Europe at the European Parliament © European Union, 2017
Commission presents White Paper on the future of Europe: Avenues for unity for the EU at 27

In preparation for the Rome Summit of 25 March that will mark the 60th anniversary of the EU, the European Commission has published a White Paper on the Future of Europe. The white paper, which Commission President Jean-Claude Juncker presented before the European Parliament on 1 March, sets out the main challenges and opportunities for Europe in the coming decade. It presents five scenarios for how the Union could evolve by 2025 depending on the path chosen. The scenarios cover a range of possibilities and are illustrative in nature. They are neither mutually exclusive, nor exhaustive. In scenario 1, “Carrying On”, the EU27 focuses on delivering the positive reform agenda agreed upon by all 27 Member States in 2016. In scenario 2, “Nothing but the Single Market”, the EU is gradually re-centred on the single market while scenario 3, “Those Who Want More Do More”, allows willing Member States to do more together in specific areas. In scenario 4: “Doing Less More Efficiently” the EU focuses on delivering more and faster in selected policy areas, while doing less where it is perceived not to have an added value. Finally, in Scenario 5, “Doing Much More Together”, Member States decide to share more power, resources and decision-making across the board. To encourage debate, the Commission, together with the European Parliament and interested Member States, will host a series of “Future of Europe Debates” across Europe’s cities and regions over the coming months. The Commission will also publish a series of reflection papers on various topics, including one on the deepening of the Economic and Monetary Union (EMU). First conclusions could be drawn at the December 2017 European Council in order to decide on a course of action to be rolled out in time for the European Parliament elections in June 2019.

See also : Commission presents White Paper on the future of Europe: Avenues for unity for the EU at 27
Jean-Claude Juncker, President of the European Commission
Jean-Claude Juncker, President of the European Commission

“As we mark the 60th anniversary of the Treaties of Rome, it is time for a united Europe of 27 to shape a vision for its future. It's time for leadership, unity and common resolve.”

More News
Press conference by Valdis Dombrovskis, Vice President of the EC, Pierre Moscovici and Marianne Thyssen, Members of the EC, on conclusions of College's orientation debate on 2017 European Semester – country reports © European Union, 2017
European Semester Winter Package: Commission publishes review of Member States’ progress towards economic and social priorities

On 22 February, the European Commission published its annual analysis of the economic and social situation in the Member States. The analysis includes an assessment of remaining imbalances, as well as a report on the implementation of the Fiscal Compact, which stipulates that national budgets must be in balance or in surplus under the balanced budget rule, in national legal frameworks. The Commission finds that Member States are making headway in implementing the individual policy guidance they received last year around the “virtuous triangle” of boosting investment, pursuing structural reforms and ensuring responsible fiscal policies. Moreover, although they are still above pre-crisis levels, unemployment rates are declining in most Member States due to the economic recovery. The In-Depth Reviews contained in some of the country reports (summarised in country cards) show that large current account deficits have been corrected, and sizeable stocks of private, public and external debt have started falling as a share of GDP. However, high current account surpluses are only being adjusted to a limited extent, while large stocks of non-performing loans weigh on the financial sector in some Member States. 

See also : The analysis phase
Pierre Moscovici, Member of the EC in charge of Economic and Financial Affairs, Taxation and Customs, at press conference on conclusions of College's orientation debate on 2017 European Semester – country reports © European Union, 2017
Macroeconomic Imbalances Procedure: 12 Member States facing imbalances or excessive imbalances

As part of the European Semester, last November the Commission launched In-Depth Reviews for 13 Member States to analyse whether they were experiencing macroeconomic imbalances and to assess the gravity of those imbalances. The results of these Reviews were included in the corresponding Country Reports (summarised in country cards) released as part of the European Semester winter package on 22 February. The Commission has concluded that Finland is no longer experiencing imbalances in the meaning of the Macroeconomic Imbalances Procedure (MIP). The other 12 Member States are facing either imbalances (Germany, Ireland, Spain, the Netherlands, Slovenia and Sweden) or excessive imbalances (Bulgaria, France, Croatia, Italy, Portugal and Cyprus). These 12 will continue to be subject to specific monitoring adapted to the degree and nature of their imbalances. This will focus on their policy responses through an intensified dialogue with the national authorities, through experts’ missions and through progress reports. 

See also : Macroeconomic imbalance procedure
Image taken from Investment Plan webpage © European Union, 2014
Investment Plan: EUR 45.7 million deal signed to support Croatian SMEs; EUR 94 million to support Nordic infrastructure

The European Investment Fund (EIF) and Privredna banka Zagreb (PBZ) signed a COSME agreement on 21 February that will allow PBZ to provide HRK 350 million (EUR 45.7 million) in loans to small and medium-sized Croatian businesses. This agreement was made possible with the support of the European Fund for Strategic Investments (EFSI), the central pillar of the European Commission's Investment Plan for Europe. Meanwhile, the European Investment Bank (EIB) signed a SEK 900 million (EUR 94 million) agreement on 16 February to support investment in local infrastructure in the Nordic countries through the “Infranode I” investment platform. This agreement was made possible by the support of the Juncker Fund, the central pillar of the European Commission's Juncker Plan to extend the EFSI by increasing its firepower and duration as well as reinforcing its strengths. The “Infranode I” investment platform has now raised a total of SEK 3.35 billion (EUR 350 million) for essential infrastructure investments in the Nordic countries. Other institutions that invested alongside the EIB include Folksam, KPA Pension and the IMAS Foundation.

See also : Investment Plan
People walking in a building © European Union, 2017
Fair Taxation: Commission welcomes new rules to prevent tax avoidance through non-EU countries

The Commission welcomed an agreement reached at the ECOFIN Council meeting on 21 February that lays down new rules to help prevent tax avoidance via non-EU countries. This latest addition to the EU's anti-tax avoidance toolbox will prohibit multinational companies from escaping corporate tax by exploiting differences between the tax systems of Member States and those of non-EU countries (so-called ‘hybrid mismatches’). The new provisions build on the Anti-Tax Avoidance Directive (ATAD) agreed upon last July, which sets out EU-wide anti-abuse measures against tax avoidance. Hybrid mismatches occur when countries have different rules for the tax treatment of certain income or entities, which multinational companies can abuse to avoid being taxed in either country. The new agreement (ATAD 2) will prevent hybrid mismatches of all types from being used to avoid tax in the EU, even when the arrangements involve third countries. The new rules will come into force on January 1, 2020, with a longer phasing-in period of 2022 for one article (Art. 9a).

See also : Fair Taxation: Commission welcomes new rules to prevent tax avoidance through non-EU countries
Image taken from Real Economy. © Euronews, 2017
Real Economy: Smart cities solving problems created by urban sprawl

Urban sprawl is the reality for two out of three people living in Europe, as Europe’s cities increasingly become economic powerhouses for jobs and opportunities. Around 80% of Europe’s energy is used by city dwellers, who also contribute around 85% of the continent’s GDP. In the latest edition of Real Economy, Euronews examines the role of smart cities in dealing with critical urban issues like economic hardship, housing, transportation and pollution. Smart cities connect humans, society, information and communication technology. These connections help a citizen to know, for example, when his or her bus to work will arrive or to find a parking space. They enable municipal authorities to control traffic to decrease congestion, light street lights at the right time or warn about pollution levels in real time. Europe has put urban development at the heart of its plan for 2020, with a significant chunk of European regional development funds earmarked to help smart cities, along with other funds that can be mixed and matched by cities and national governments.

See also : How 'smart city' technology is connecting europeans
ECFIN eNews reader survey © European Union, 2017
ECFIN E-news reader survey: What do you think of it?

The EU economic and financial landscape – and economic governance – continues to evolve in 2017. ECFIN E-news aims to summarise for you the latest key developments and invites you to read further on the topics you find most interesting. We would like to kindly ask you to let us know your views and suggestions. What do you like about the newsletter? What could be improved? Thank you for sharing your thoughts by spending just a few minutes to answer the online questionnaire. We appreciate your feedback. 

See also : ECFIN E-news reader survey: What do you think of it?
People © European Union, 2017
February 2017: Economic Sentiment broadly unchanged in both the euro area and the EU

In February, the Economic Sentiment Indicator (ESI) remained broadly unchanged in both the euro area (+0.1 points to 108.0) and the EU (+0.3 points to 108.91). Broadly flat euro area sentiment resulted from higher industry, services and construction confidence, on the one hand, and lower consumer and retail trade confidence on the other hand. Amongst the largest euro area economies, the ESI rose in Spain  (+1.3) and France  (+1.1), while it remained broadly unchanged in Italy (+0.2) and the Netherlands (+0.1) and decreased only in Germany (­0.8). The marginally better outcome for the EU ESI (+0.3) resulted from markedly improved sentiment in the largest non­euro area EU economy, the UK (+2.3), which was partly offset by the deterioration of the ESI in Poland (­0.7). While industry, services, and construction confidence improved in line with the euro area, EU confidence in the retail trade and financial services sectors improved slightly. Finally, the decrease in EU consumer confidence was less marked than in the euro area.

See also : Latest business and consumer surveys
Inflation © iStockphoto
Annual inflation up to 1.8% in the euro area; 1.7% in the EU

Euro area annual inflation was 1.8% in January 2017, up from 1.1% in December 2016. In January 2016 the rate was 0.3%. EU annual inflation was 1.7% in January 2017, up from 1.2% in December. A year earlier the rate was 0.3%. These figures come from Eurostat, the statistical office of the EU. In January 2017, the lowest annual rates were registered in Ireland (0.2%), Romania (0.3%) and Bulgaria (0.4%). The highest annual rates were recorded in Belgium (3.1%), Latvia and Spain (both 2.9%), and Estonia (2.8%). Compared with December 2016, annual inflation fell in two Member States and rose in twenty-six. The largest upward impacts to euro area annual inflation came from fuels for transport (+0.50 percentage points), heating oil and vegetables (+0.14 pp each), while telecommunications (-0.09 pp), gas (-0.08 pp) and bread & cereals (-0.05 pp) had the biggest downward impacts.

See also : Annual inflation up to 1.8% in the euro area
Bank lending constraints in the Euro area. European Economy. Discussion Paper 43.
Bank lending constraints in the Euro area. European Economy. Discussion Paper 43.
This paper looks at how increases in bank capital requirements could affect bank lending in the current environment.
Graph of the Week
Overview of progress on prevention and correction of macroeconomic imbalances and public deficits

European Semester 2017: macroeconomic imbalances and government deficits

Selected Speeches
1 March 2017
President Juncker. Avenues for unity for the EU at 27. Speech 17/424 of 1 March.
22 February 2017
Vice-President Dombrovskis. Remarks by Vice-President Dombrovskis at the European Semester Winter Package press conference. Speech 17/331 of 22 February.
21 February 2017
Vice-President Dombrovskis. ECOFIN press conference. Speech 17/325 of 21 February.
20 February 2017
Commissioner Moscovici. Introductory remarks at the Eurogroup press conference. Speech 17/316 of 20 February.

Public consultation on the Capital Markets Union mid-term review. Deadline 17 March.

Ex-post evaluation of macro-financial assistance to Ukraine

Ex-post evaluation of macro-financial assistance to Jordan
9-10 March
European Council
9 March
Frankfurt, Germany
ECB Governing Council meeting
13-16 March
European Parliament Plenary
15-18 March
G20 Deputies and Ministerial meeting
20-21 March
25 March
European Council on the 60th anniversary of the Treaties of Rome
3-6 April
European Parliament Plenary
7-8 April
Informal Eurogroup/ECOFIN
21-23 April
Washington, D.C
World Bank Group / IMF 2017 spring meetings
26-27 April
European Parliament Plenary
27 April
Frankfurt, Germany
ECB Governing Council meeting
11–13 May
Bari, Italy
G7 Finance Ministerial meeting
15–18 May
European Parliament Plenary
22-23 May
1 June
Brussels Economic Forum
12–15 June
European Parliament Plenary
15–16 June
22–23 June
European Council
3–6 July
European Parliament Plenary
7–8 July
Hamburg, Germany
G20 Summit
10–11 July
This is the newsletter for Economic and Financial Affairs.

If this Newsletter was forwarded to you and you are interested to receive it directly you can subscribe here.

You may unsubscribe from this newsletter by going to Your Profile.