Summit to focus on economic reform
EU leaders to discuss financial priorities with Europe 2020 and climate change also on the agenda.
The leaders of the European Union’s 27 national governments will meet next Thursday (17 June) in Brussels with the aim of agreeing reforms to economic governance and priorities for financial reform.
The European Council will also adopt a ten-year strategy for economic growth, and discuss progress in international climate-change negotiations.
Herman Van Rompuy, the president of the European Council, wants to secure a firm commitment from governments that they will, in future, submit details of their draft budgets for review by the EU before they are submitted to national parliaments. Van Rompuy also wants agreement to reform the sanctions that can be applied to member states that have excessively high deficits or levels of public debt. He sees the steps as essential to restoring market faith in the eurozone’s finances.
Van Rompuy, however, is likely to face resistance from the UK, which has said that it will not provide any budget details for review that have not already been submitted to parliament and placed in the public domain.
The UK fears that Van Rompuy is prejudging the work of a ministerial taskforce that was set up by a decision of 27 March. The taskforce, which met for the first time on 21 May and for a second time on 7 June under the chairmanship of Van Rompuy, is drafting proposals to reform economic governance. It is scheduled to submit its report in October.
The Commission plans to make proposals in July to take forward any agreements that are reached on economic governance at next week’s European Council.
G20 talks
The national leaders will agree common positions on financial reform ahead of a summit of leaders from the G20 group of developed and emerging economies in Toronto on 26-27 June. These positions will include support for the introduction of banking levies, and that G20 countries should increase the pace of their reforms to financial supervision.
José Manuel Barroso, the president of the European Commission, will come under pressure from Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, France’s president, to accelerate plans to regulate the derivatives market and short-selling. Merkel and Sarkozy sent Barroso a letter on Tuesday (8 June) calling on the Commission to present “all possible measures for action” before the EU’s finance ministers meet on 13 July.
Fact File
Pre-summit progress on reform
Eurozone support facility
Finance ministers agreed on Monday (7 June) on the details of a €440 billion support facility to help a eurozone country at risk of defaulting on its public debt. The deal was hailed by ministers as a breakthrough for economic governance in the eurozone. They said it should reassure the financial markets that eurozone countries are safe from default, and so prevent a repeat of the soaring bond yields experienced over the past two months by Greece, Portugal, Spain and, most recently, Hungary.
The facility will be a special purpose vehicle (SPV). In the event that a government in the eurozone is faced with serious financial difficulties, the SPV will issue its own debt, and use the proceeds to provide loans to the member state in difficulty. The facility’s debt will be guaranteed by the members of the eurozone, as well as by Sweden and Poland, which have volunteered to take part. The chairman of the board of the SPV will be Klaus Regling, a former director-general for economic and financial affairs at the European Commission and a German national.
Click Here: PuttersEurostat powers
EU finance ministers on Tuesday (8 June) agreed legislation to give Eurostat, the Union’s statistical office, audit powers over member states’ national finances. Eurostat will be able to send officials to national capitals to go through the public accounts and check that governments are accurately reporting their deficits and level of public debt. Olli Rehn, the European commissioner for economic and monetary affairs, said that the first audit visit was likely to take place in Bulgaria, because the Commission has “some concerns as regards [the country’s] statistical performance”.
The leaders will also adopt Europe 2020, a ten-year strategy to repair the economy and deliver growth.
In addition, leaders will confirm finance ministers’ decision on Tuesday that Estonia should join the eurozone on 1 January 2011, becoming the 17th member of the single currency.
On climate change, leaders will ask the Commission for further study into whether the EU should increase its target for cutting greenhouse-gas emissions from 20% to 30% by 2020, from 1990 levels.