The Finance Minister, Pierre Gramegna, attended the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels on 15 July 2015, to present its members with the priorities of the Luxembourg Presidency in the field of economy and finances.
Upon welcoming "the central role" of its guests to achieve the objectives of the Presidency, the Minister said he was aware of the many challenges at this "decisive moment" for Europe, against the backdrop of a weak recovery which is also too dependent on temporary factors. Pierre Gramegna cited high unemployment, the lack of necessary investments in companies, the prevailing gaps in Economic and Monetary Union (EMU), the issues still open for business taxation and the issues associated with climate change.
Economic governance
The Minister first raised the subject of economic governance, noting that the day before, the ECOFIN Council concluded the process of the 2015 European Semester by adopting the country-specific recommendations. The recommendations are based on the three pillars of the growth strategy adopted by the European Council, which remain the key "to maximise our potential for collective growth", said Pierre Gramegna: maintaining financial stability and fiscal prudence; the stimulation of growth through productive investment; and improving the EU's global competitiveness through structural reforms.
But according to the Minister, one of the weaknesses of the process lies in their implementation: "We must ensure that they are better taken into account" when developing policies, he said. For the next European Semester, which will be launched at the end of the Presidency, Pierre Gramegna promised that he would personally ensure that the Ecofin Council carefully examines the report of the warning mechanism and the Annual Growth Survey "taking full account of the implementation of previous recommendations".
In the same context, the Minister also referred to the ongoing discussions on the principle of flexibility in the Stability and Growth Pact set by the European Commission in a communication of January 2015. In this regard, technical work has begun and an agenda has been set, he added, while some clarity in this respect is deemed necessary.
Pierre Gramegna also stressed that the Presidency would continue efforts to boost investment in the "Juncker plan" of 315 billion euros over three years. In this regard, he welcomed the agreement between the co-legislators on the financial support of the plan, the European Fund for Strategic Investment (FEIS or EFSI). The Presidency "will ensure a rapid adoption of delegated acts relating to the Fund's trend chart", the Minister said.
Financial services
Another priority of the Presidency will be the financial sector, particularly the Capital Markets Union (CMU), considered to be "of the utmost importance". Pointing out that this ambitious project covered a very broad spectrum and that the Commission's plan on this matter would be presented in the autumn, the Minister underlined the need to make progress as quickly as possible on two issues: a proposal on securitisations that aims to make this activity more transparent, simpler and better and a review of the Prospectus Directive designed to facilitate access to capital markets for SMEs.
Beyond the CMU, the Presidency will aim to strengthen the regulation of financial services in advancing the negotiations on benchmark proposals and insurance mediation. By the same token, the Minister looked forward to constructive negotiations as soon as possible with Parliament on the structural reform of the European banking sector, after the Latvian Presidency managed to reach a consensus on the position of the Council at the most recent Ecofin in June 2015.
Tax policy
The Fiscal policy also tops the Luxembourg Presidency's list of priorities, and the subject will be on the agenda of the informal meeting of Ministers for Economy and Finance in September, stated Pierre Gramegna, for whom "fair taxation in the Union is an absolute priority".
For the Minister, transparency will be key in this area and the main challenge will be to achieve a proposal for the exchange of information on tax advance rulings by the end of the Presidency. He nevertheless lamented the very slow progress, considering discussions raised more new questions than clarifications. It is "a tough issue" according to the Minister, who however said he believed the goal would be reached.
Furthermore, Pierre Gramegna emphasised that the nominal initiative of the OECD on the BEPS (for "base erosion and profit shifting"), which will be completed in autumn 2015, should continue to guide operations on taxation within the EU. This is to develop a coherent approach in this area and thus ensure transparency and a "level playing field" worldwide, he added. If the EU can afford to be a pioneer in this field, "it must ensure that others follow", said the Minister. He said "there will be a lot of work to see how to translate some of the recommendations in EU legislation".
Pierre Gramegna also confirmed that the Presidency would be striving to advance the work on a future proposal for an amended directive relating to the Common Consolidated Corporate Tax Base (CCCTB), the concept of which is easily understood, but not easy to put into practice. Similarly, the Presidency will continue discussions on the directive on interest and royalties.
The Minister also stated that under his presidency, the Ecofin Council would be conducting a careful review of the action plan for fair and effective taxation of companies, proposed by the Commission in June 2015. Considering that action on the matter was necessary, he nevertheless stressed the need to be alert, in order to ensure the integrity of the single market and, in particular, the free movement of capital and freedom of establishment.
Pierre Gramegna said that the Presidency would do its utmost to facilitate discussions on the proposed tax on financial transactions, which is the subject of enhanced cooperation between 11 Member States. It also will do its utmost to ensure that they are transparent and include all the Member States, while implementing the project may have extraterritorial effects, noted the Minister.
Pierre Gramegna also stated that the Presidency was aware of the importance of the 21st Conference of the Parties to the Framework Convention of the United Nations on Climate Change (COP21), on which the Finance Ministers will be responsible for defining the position of the EU on financial issues. The subject will be addressed at the Informal Meeting of Ministers for Economic and Financial Affairs on 11 and 12 September 2015 in Luxembourg, he said.
Deepening of the EMU
In conclusion, the Luxembourg Minister returned to the Greek crisis, which he said showed that Europe had always been able to take steps forward whenever it had been in difficulty. Negotiations have not been easy, but the compromise that paves the way to a third aid package shows the EU's solidarity, which represents responsibility, the Minister reiterated.
The discussion on the deepening of the economic and monetary union within the context of the presentation to the June European Council of the Five Presidents' Report is being held "at a crucial time", said Pierre Gramegna. He noted that the Greek crisis of recent days showed a "lack of tools in the EMU".
For the Minister, this strengthening is aimed at lending more credibility to the EU, and we must above all implement what has already been decided, including the directive on the recovery and resolution of credit institutions and investment firms (BRRD), and the single resolution funds (in particular the issue of bridge financing for the bail and that of Fund safety) and the deposit guarantee scheme. As regards the deposit guarantee scheme, precisely in the current context of the different national systems, Pierre Gramegna pointed out that a reinsurance system could be contemplated in the short term, whilst a veritable pan-European deposit guarantee system is likely only over the medium term. A Commission proposal is expected in this regard.
The Minister also stressed the social scope in the EMU "which was designed to improve people's lives". He added that the Presidency did not intend to neglect it, while supporting the ambition of a "triple A social" rating for the EU.