17 February 2020

Main results - Eurogroup

The Eurogroup discussed the economic situation in the eurozone. In inclusive format, ministers adopted a report covering details of a possible Intergovernmental Agreement (IGA) for the budgetary instrument for convergence and competitiveness (BICC).

 

 Appointment of the Eurogroup Working Group President

The Eurogroup appointed Tuomas Saarenheimo as President of the Eurogroup Working Group (EWG).

Saarenheimo will take office as of 1 April 2020 and will serve a two-year term. He will succeed Hans Vijlbrief who had held the position between February 2018 and January 2020.

Tuomas Saarenheimo appointed President of the Eurogroup working group

Commission presentations: EMU priorities and Six- and Two-Pack review – eurozone related issues

The Commission presented its priorities for the Economic and Monetary Union (EMU) as well as the main points of its communication on the economic governance review, focusing on those that are relevant for the eurozone.

Some elements of the EU economic governance are applicable only to the eurozone, notably the so called “2-pack” reforms that were introduced in 2013 to establish a framework for dealing with member states facing financial stability difficulties and to strengthen budgetary co-ordination.

Thematic discussion on growth and jobs: tax wedge on labour

As part of the thematic discussions on growth and jobs, the Eurogroup exchanged views on the tax wedge on labour. The discussion focused on the shift from labour to environmental taxation. 

A technical note by the Commission and a presentation by Professor Ottmar Edenhofer, Director of the Mercator Research Institute on Global Commons and Climate Change (MCC) and of the Potsdam Institute for Climate Impact Research (PIK), informed the debate.

Ireland - Post-programme surveillance

The European Commission and the European Central Bank (ECB) presented the main findings of the 12th post-programme surveillance mission to Ireland carried out between 19-21 November.

The European Stability Mechanism (ESM) informed ministers about its early warning system. The Eurogroup was also informed by the International Monetary Fund (IMF) about its staff visit to Ireland.

Economic situation in the eurozone - Commission's winter forecast

Ministers exchanged views on the economic situation of the eurozone on the basis of the Commission's winter forecast.

Regular discussions of the economic situation and economic policy challenges underpin the Eurogroup's efforts to bolster economic growth and job creation.

European Economic Forecast. Winter 2019

2020 euro area recommendations

The Eurogroup discussed the draft 2020 recommendations addressed to the euro area, ahead of their approval at the Economic and Financial Affairs Council. It agreed on five priorities for 2020: 

Budgetary instrument for convergence and competitiveness: report on a possible Intergovernmental Agreement (IGA)

Ministers adopted a report for EU leaders, covering the need, the content, the modalities and the size of a possible IGA for the budgetary instrument for convergence and competitiveness (BICC). 

At the Euro summit in December 2019, EU leaders invited the Eurogroup to provide a swift contribution on the appropriate solutions for the financing of the budgetary instrument for convergence and competitiveness (BICC), on the basis of the October 2019 term sheet, in order to be able to finalise it in the context of the next multiannual financial framework (MFF).

Banking union: reporting by Denmark and Sweden

Both Denmark and Sweden have recently issued reports about the implications of a possible participation in the banking union. Ministers Nicolai Wammen and Magdalena Andersson presented the key elements of these reports. 

• structural reforms
• fiscal sustainability and public investment
• labour markets and social inclusion
• financial stability
• EMU deepening

Eurogroup report on a possible IGA for the budgetary instrument for convergence and competitiveness

Remarks by Mário Centeno following the Eurogroup meeting of 17 February 2020

[...]The European Commission presented its winter forecast. This confirms the euro area economy continued to grow, albeit at a subdued pace and that it faces downside risks. While some of these risks have receded slightly, including in the case of Brexit and trade tensions, the recent outbreak of coronavirus is a reason for concern and one which we will need to monitor closely.

The slowdown is still with us and we have agreed to coordinate any need for further policy response.

This exchange laid the ground for our discussion on the so-called euro area recommendations. We agreed five priorities for 2020.

They will not surprise you but I will list them anyway: structural reforms, fiscal sustainability and public investment, labour markets and social inclusion, financial stability and EMU deepening.

Additionally, this year we have increased the emphasis on environmental sustainability.

We expect the Ecofin Council to formally adopt these recommendations tomorrow.

They will become even more relevant once the Eurozone budgetary instrument is in place – hopefully next year. And why is that? Because euro area recommendations will include the priorities for reform and investment, against which member states’ initiatives will be assessed and selected.

This is a powerful new governance instrument for the euro area.

The Commission also presented its priorities for the Economic and Monetary Union (EMU). Among them are a communication on the international role of the euro, a proposal on European unemployment insurance scheme, a review of the economic governance and further steps to completing banking union and deepening Capital Markets Union.

While these priorities are shared, there is a clear sense of urgency around the room. A sense that there is a limited window of opportunity and we must deliver on these priorities, with a particular stress on Banking Union.

A first step on reviewing this priority list was a first discussion on the Commission’s recent communication on our economic and fiscal rules.

We welcomed the analysis by the Commission, which will inform future work at deputies’ level. There is no intention to overhaul our governance framework, which by the way has served us well. There is some support to simplify our rules, prevent pro-cyclicality and to consider how these rules can help us tackle new EU policy challenges, while preserving sustainability.

The Eurogroup will come back to this before the close of the semester.

Another priority for this semester is to finalise ongoing work on the ESM Treaty and the euro area budgetary instrument. We picked-up on the latter, also known as BICC, specifically to elaborate on the question of additional resources, and the possibility of an inter-governmental agreement (IGA).

As requested by the Leaders in December, we adopted a report covering the need, the content, the modalities and considerations on the size of a possible IGA. On the basis of this, external assigned revenues can top-up the budget envelope of the BICC.

 

I know you are all looking forward to the EU summit this week. Those EU Budget negotiations will decide many things, including the BICC size. Our report will inform this decision-making process. That is why I will deliver this report tomorrow to President Michel. [...]

Full remarks

 

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