08 December 2021

Remarks by Executive Vice-President Dombrovskis at the ECOFIN press conference

Key points : capital markets will play a large part in making the EU economy more inclusive and resilient, and supporting the green and digital transitions. Ministers held a first debate on the proposals that the Commission presented last month - and AML policy

First of all, thank you ministers, thank you Andrej, for all the hard work that you have been doing and that the Slovenian presidency has been doing.

I would like to congratulate you and your team on hard work and effort in steering so many important files through Council during the Slovenian Presidency.

As the minister mentioned, Council has reached political agreement on reduced VAT rates.

It has taken a long time to get to this point. The agreement aligns the VAT system with the EU's priorities on climate change, digitalisation and public health protection.

We achieved a delicate balance that makes our VAT rates fit for the challenges of a modern economy and society.

Just to recall, it was nearly four years ago that the Commission made its original proposal on reduced VAT rates. This was part of a much-needed overhaul of VAT rules dating back to the 1990s.

After a lot of negotiation and compromise, it was decided to keep a positive list of goods and services.

This means that Member States can only apply reduced rates to the items on the list, provided that certain general principles are respected to prevent a proliferation of lower tax rates.

For the first time, Member States will be able to exempt from VAT certain listed items considered as basic needs.

The list will be in line with the European Green Deal and will treat Member States equally.

It will help to reduce the fragmentation of the EU's single market and avoid distortions of competition between countries.

Once the European Parliament has given its final opinion, we hope to take this general approach forward early next year.

Turning to the recovery and economic outlook:

Our continued and coordinated efforts are bearing fruit.

The European economy is bouncing back strongly from the recession, helped by a successful vaccination campaign and rebound in demand.

Our autumn forecast projects EU's economic growth at 5% this year and 4.3% in 2022.

Still, we need to remain vigilant. There are still many risks to contend with, both new and legacy risks.

Not least, because it affects every one of us, a marked increase in COVID-19 cases in Europe and the spread of a new variant.

We need to continue to keep a close eye on bottlenecks in supply chains and inflation developments.

In the euro area, inflation hit 4.9 per cent in November.

Our policies need to remain agile and respond to changing circumstances if needed.

 For now, the priority is to achieve competitive sustainability:

- to make Europe economically and socially stronger;

- more resilient to cope with future shocks;

- better equipped to take the most of opportunities offered by the green and digital transitions.

This is all reflected in our Annual Sustainable Growth Survey, a key part of the European Semester autumn package that ministers discussed today.

It focuses on what Europe needs for the recovery phase: targeted and temporary fiscal support measures, along with the right reforms and investments.

We also clarified how the Semester interacts with the Recovery and Resilience Facility, as its planning phase now turns into implementation. Most of the hard work with the RRF actually starts now.

A quick update on the RRF:

Last Friday, the Commission approved the first regular payment request from a Member State. Spain has achieved its first 52 milestones set out in its recovery and resilience plan.

So the Commission's approval came after a thorough assessment in close cooperation with Spain over the previous months.

On pre-financing, we have provided €54.2 billion to 18 Member States. The last disbursement was to Romania, last week. We expect to make disbursements shortly to Estonia and Malta.

The Commission is now setting up an online scoreboard to track progress in implementing the RRF, based on common indicators. It should be launched in the next weeks.

Lastly, as the minister mentioned, capital markets.

They will play a large part in making the EU economy more inclusive and resilient, and supporting the green and digital transitions. Ministers held a first debate on the proposals that the Commission presented last month.

These are:

• a new European Single Access Point;
• a proposal to boost uptake of European long-term investment funds to support the recovery;
• removing cross-border barriers for investment funds;
• and providing a consolidated tape so that all investors have easier access to trading data in capital markets.

Ministers also discussed the anti-money laundering package that the Commission adopted in July.

A lot of progress has been made and we are confident that outstanding issues can be resolved. 

We share a common responsibility to provide a safe and inclusive Europe where dirty money has no place to hide.

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