Financial Market and Services

The global financial crisis combined withthe Eurozone crisis, had a serious impact on the Spanish presidential agenda. During the first half of 2010, the Ecofin council was extremely active in responding to the crises, and given the uncertainty of Europe’s economic future and the growing calls for more European economic governance, it seems that Ecofin will remain active throughout the second half of the year. Although the Belgian government has already declared it will give the lead on this matter to EU President Van Rompuy, good cooperation and coordination between the office of the Belgian presidency and the former Belgian Prime Minister will be crucial for economic recovery and sustainable growth.

 

The Belgian presidency will continue the Spanish presidency’s focus on supervision and regulation of the financial markets. Spanish Prime Minister Zapatero has made serious efforts to push for agreement on the European Systemic Risk Board (ESRB) and the European Supervisory Authorities (ESAs). Both developed on the basis of the Larosière report for macro- and micro-prudential supervision. Despite extensive talks between the Council and MEPs, an agreement has not yet been reached. However, if a deal on the package can be made soon, it will mean a vote in the July plenary session.

 

Beyond financial supervision, the presidency will put consumer protection, including consumer credit and lending, and the deepening of the financial internal market, high on the agenda.

 

Taxation will also be a high priority. The Spanish presidency already made some significant improvement in combating tax evasion and fraud by agreeing on a proposal to revise the regulation on administrative cooperation on VAT. The proposal sets out a series of measures to extend and reinforce the exchange of information and cooperation between tax authorities. Belgium will remain active in the modernisation of the rules on the common system of VAT and in the fight against tax fraud. With regards to the latter, the focus will be on the introduction of a reverse charge mechanism to prevent fraud with GHG emission rights.

 

The Commission recently announced the revival of talks to introduce an energy tax. If it manages to make a proposal, the Belgian presidency will also have to address this issue. Other tax incentives like the financial transaction - or Tobin tax -, which have already been backed up by the European Parliament earlier this year, will also be on the agenda.

 

Furthermore, the Belgian presidency will continue to encourage the work of the Code of Conduct group to bring Member States' tax systems closer together, thereby avoiding unfair tax competition. Recently under the Spanish presidency, Ecofin provided the Commission with a mandate to initiate dialogue with Switzerland and Liechtenstein that would extend the "Code of Conduct" principles beyond the EU for the first time.

 

The Belgian presidency also plans, albeit cautiously, to manage the debate on midterm review of the 2007-2013 financial perspectives, a debate that will begin during the first half of 2011 on the basis of a Commission proposal due in September. However, amending the current budgetary framework will be quite difficult at a time when all Member States are being compelled to reduce their spending.

 

Overall, the second half of 2011 will be very busy, and the Belgian presidency will have its hands full with bringing Europe back towards sustainable economic growth. In these efforts, the Belgian presidency will need support of all European leaders. The presidency will also have to encourage Europe to speak with one voice externally, as the second half of 2010 brings a host of international summits like G20, International Monetary Fund and World Bank meetings.

 

Key Belgian Priorities

• Develop a competitive, green knowledge economy (implementation of the Europe 2020 Strategy).
• Consolidate the Stability Pact and economic governance (task force) and draw up a regulatory framework for the financial sector.
• Promote innovation (e.g. European patents) and complete the internal market (following up on the Monti report).
• Focus on industrial policy and infrastructures.
• Consolidate the link with new European policy objectives on energy, transport and emissions by adjusting taxation, etc.

Key Dates

• G20:  11-12 November 2010 (Seoul, South Korea)
• IMF and World Bank meeting: 9-11 October 2010 (Washington DC, USA)