During their meeting on 14-15 December, EU leaders discussed euro area reform, agreeing to concentrate over the next six months on areas where the convergence of views is greatest. The aim is to progress step-by-step on issues such as the completion of the Banking Union and the transformation of the ESM into the so-called European Monetary Fund. These should significantly strengthen the resilience of the European Monetary Union (EMU). In a joint press conference, French President Emmanuel Macron and German Chancellor Angela Merkel said they aim to reach a common position on euro area reform by March 2018. Leaders also adopted guidelines for the second phase of the Brexit negotiations which will entail negotiating and drafting a Withdrawal Agreement to govern the transition. During the transition, the United Kingdom, as a third country, will no longer participate in or nominate or elect members of the EU institutions, nor participate in the decision-making of the Union. All existing EU regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will apply, including the competence of the Court of Justice of the European Union, as well as the UK  obligations as a member of the Customs Union and the Single Market.

"Progressing step-by-step on issues such as the completion of the Banking Union, and the transformation of the ESM into the so-called European Monetary Fund, should significantly strengthen the resilience of the EMU.”  

In a plenary vote on 12 December Members of the European Parliament voted to adopt the Regulation to extend and enhance the European Fund for Strategic Investments (EFSI), the central pillar of the Investment Plan for Europe. This successful final step follows the agreement in principle reached by the European Parliament and Member States on 13 September. The EFSI 2.0 Regulation is expected to enter into force on 1 January 2018. It extends the EFSI from mid-2018 to the end of 2020, and increases the investment target from EUR 315 billion to at least EUR 500 billion. The new and improved EFSI will also be more transparent: the Investment Committee will publish its decisions online, showing the reasons why a particular project was selected to receive support from the EU budget guarantee, and a scoreboard of indicators will be published after the signature of each EFSI project. In addition, at least 40% of EFSI infrastructure and innovation projects will aim to contribute to climate action in line with the Paris Agreement and there will be an increased focus on small projects that help SMEs.

In the closing weeks of 2017, the European Investment Bank (EIB) Group has signed financing deals across Europe for over EUR 425 million. The deals include a EUR 75 million (DKK 560 million) loan agreement concluded with Danish company Haldor Topsoe for research and development of cutting-edge catalyst technologies; EUR 50 million financing to the Czech Republic Inven Capital Fund to support the growth of clean energy and smart technology SMEs and midcaps; a EUR 10 million loan agreement to support the growth of Flexenclosure, a Swedish high-tech manufacturer; financing of up to EUR 30 million to Viking Heat Engines, a Norwegian green tech company; a EUR 100 million loan to Cellnex Telecom to support mobile telecoms infrastructure development in Spain and Italy; a EUR 85 million loan to Grifols to support its research on rare and chronic diseases; and a EUR 70 million loan to regional water supply company Oasen Drinkwater in the Netherlands. In France, the EIB, Societe Generale and Brittany Ferries announced the success of the first green maritime financing under the EIB’s EUR 750 million Green Shipping Guarantee (GSG) programme while the European Investment Fund (EIF) and Crédit du Nord Group together with its regional banks signed a guarantee transaction to increase lending to innovative SMEs and small mid-caps. 

Seasonally adjusted GDP rose by 0.6% in both the euro area and the EU during the third quarter of 2017, compared with the previous quarter, according to an estimate published on 7 December by Eurostat, the EU statistical office. In the second quarter of 2017, GDP grew by 0.7% in both areas. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 2.6% in both the euro area and the EU in the third quarter of 2017, after +2.4% in both zones in the second quarter of 2017. Among Member States for which data are available for the third quarter of 2017, Romania (+2.6%), Malta (+1.9%), Latvia (+1.5%) and Poland (+1.2%) recorded the highest growth compared with the previous quarter, while GDP decreased in Denmark (-0.6%) and remained almost stable in Lithuania (+0.1%). Household final consumption expenditure had a positive contribution to GDP growth in both the euro area and the EU (+0.2 and +0.3 percentage points, respectively) as did gross fixed capital formation (+0.2 pp in both zones). The contribution of the external balance to GDP growth was slightly positive for the euro area and neutral for the EU. The contribution of changes in inventories was positive for both zones. 

DG ECFIN has produced two new video episodes to complement our series European Economy Explained. In this series, we regularly produce animations which explain EU economic and financial policies to citizens in a simple and concise way. The two new video episodes focus on the European Investment Project Portal (EIPP). The first one, “Finding the right partner for projects”, explains that just as matchmaking services can help people to find suitable partners in real life, the European Investment Project Portal helps EU project promoters to connect with investors worldwide to find the right match. The second video, “How to use the portal”, explains the key features of the portal. Investors can browse through a wide variety of projects and filter their searches, then easily contact project promoters, should they wish to do so. Project promoters can increase the visibility of their projects by publishing them for free on the portal. 

The Commission has put forward new guidelines on withholding taxes to help Member States reduce costs and simplify procedures for cross-border investors in the EU. The new Code of Conduct announced on 11 December offers solutions for investors who, as a result of how withholding taxes are applied, end up paying taxes twice on the income they receive from cross-border investments. A withholding tax is a tax withheld at source in the EU country where investment income such as dividends, interests, and royalties is generated. These levies provide a way for Member States to ensure that taxes are being applied appropriately on cross-border transactions. Since the income is often taxed again in the Member State where the investor is resident, however, problems of double taxation can result. Investors do have the right to claim a refund when double taxation occurs but refund procedures are currently difficult, expensive and time-consuming. The recommendations, developed alongside national experts, form part of the EU's Capital Markets Union Action Plan and should improve the system for investors and Member States alike. 

Extension of the European Fund for Strategic Investments – EFSI 2.0