11 October 2016

European Commission: ECOFIN

Speech by Vice-President Dombrovskis at the press conference.

Today we had quite an extensive agenda.

Amongst other things, we discussed the outcome of the Annual IMF – World Bank Meetings. At the meetings, we looked into the measures needed to spur convincing economic growth. Make no mistake - our economies are still fragile and vulnerable to shocks. The IMF also concluded that low growth and a slow recovery are exacerbating political risk in advanced economies, causing the biggest threat to the global economy. We continue to encourage Member States to implement essential structural reforms to make our economies more modern, more competitive and underpinned by an effective social fabric.

The Commission outlined to Ministers the proposed European Fund for Sustainable Development. Building on the Investment Plan for Europe, it aims to support social and economic infrastructure and SMEs, not least by removing obstacles to private investment in Africa and the EU's neighbouring countries. With an input of €3.35 billion from the EU budget and the European Development Fund, the EIP would support innovative guarantees and similar instruments in support of private investment, so that the EIP can mobilise up to €44 billion of investments.

Today, we also took stock of the lessons learned from the 2016 European Semester and identified further improvements that can be made. We welcome the support of Ministers for the changes we have introduced in the semester, such as to streamline and simplify it, improve its democratic accountability and strengthen the social dimension. Today's discussion was very timely as we will shortly launch the next semester round by setting our economic policy priorities for the year ahead.

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The Commission updated Ministers on the ongoing discussions on the draft directive on the fight against fraud against the EU budget and on the European Public Prosecutor´s Office. The main focus of discussions centred on the inclusion of serious VAT fraud within its scope. We know that VAT fraud causes substantial losses for national budgets, and it affects the Member States' VAT own resources contributions to the EU Budget. In 2015, these contributions amounted to over €18 billion, accounting for around 13% of the EU's total revenue. Cross-border VAT fraud in the EU is estimated to result in revenue losses of around 50 billion EUR per year. Preventive measures to fight VAT fraud are vital, but not the only measure that can be taken. There will be always criminals finding loopholes in the system. VAT fraud does not stop at national borders, which requires national authorities to work together. Ad hoc judicial cooperation takes time and is not always effective. The Commission is working on a specialised European body, the European Public Prosecutor´s Office, to fight, amongst other things, serious cross-border VAT fraud. It is clear from the discussions that this is a European problem which requires European solution. Nevertheless, as Minister outlined, it is a sensitive topic, so the further discussions will be needed and the next discussions will take place on Friday by Justice and Home Ministers. 

We also updated Ministers on the ongoing discussions in the Basel Committee on banking reforms. We underlined our full commitment to working on agreed international principles. We need to find solutions that both ensure financial stability and do not weigh unduly on the financing of the broader economy in Europe. It is equally important to retain sufficient risk sensitivity in the regulatory framework. We want to avoid changes which would lead to a significant increase in the overall capital requirements. We received strong backing from all EU Member States on this in July.  And this is in line with the Basel Committee's own commitments. In today's discussions Ministers reiterated this position – that we need to stick with the approach taken in July. Staying with the financial sector for a moment, I would like to just add that we hope the last Member State to transpose the BRRD would be able to do so very soon. Then all conditions will be in place to start work on the fiscal backstop for the single resolution fund.

Full speech

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