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Ecofin Council to discuss Finland's Stability Programme

Ministry of Finance 20.1.2006 9.44
Press release 4/2006

The first Ecofin Council of the Austrian Presidency will meet in Brussels on Tuesday 24 January 2006. Finance Minister Eero Heinäluoma will represent Finland at the meeting. The agenda will include matters such as Finland's stability programme, reduced rates of value added tax, the Presidency work programme and preparation of the European Council.

The Eurogroup meeting, which will be held on 23 January, will address issues related to the current economic situation, the excessive deficit procedure for the UK and Finland's stability programme.

Implementation of the Stability and Growth Pact

Finland's stability programme

The Ecofin Council is due to adopt the Council opinion on Finland's stability programme update. Overall, Finland's budgetary position is considered to be sound and the budgetary strategy provides a good example of fiscal policies run in compliance with the pact. The debt ratio is well below the reference value and is expected to continue declining.

Finland endorses the Council's draft opinion. The Stability and Growth Pact and Member States' multilateral fiscal surveillance play a key role in the economic policy strategy of the EU and the euro area. It is essential that implementation of the Stability and Growth Pact is effective and adheres to the principles adopted at the spring European Council of 2005. Finland also stresses the importance of equal treatment of Member States.

Convergence programmes

The Council aims to adopt the opinion on the convergence programme updates for Sweden, Denmark, the Czech Republic, the Slovak Republic and Hungary. The Commission's assessment is that, with the exception of Hungary, the updates are relatively problem-free. The Council is likely to advise Hungary to draw up a revised convergence programme by 1 September 2006. Finland can endorse the draft Council conclusions.

Excessive deficit procedure for the UK

The Council will decide whether the UK's general government deficit is excessive. The Commission drew up a report on the UK's deficit position in September. Finland agrees with the Commission's analysis of the UK's general government position and the Commission's opinion that the UK deficit is excessive.

Reduced VAT rates

The Ecofin Council aims to reach political agreement on reduced VAT rates. The issue was last addressed at the Council meeting in December 2005, when no agreement was reached. The matter was listed on the December European Council agenda but was deferred to the January meeting of the Ecofin Council. The President's proposal is not available at this stage. Finland hopes that an understanding can eventually be reached on reduced VAT rates.

Presentation of Presidency work programme

The Presidency will present the Ecofin Council work programme for 2006 drawn up jointly by Austria and Finland. The key goals in the programme are to bolster economic growth and employment in Europe and to strengthen Europe's position in the global context. It also aims to ensure stability-oriented economic policies and accelerate economic and structural reforms with a view to creating a more dynamic and innovativeeconomic environment in Europe with higher productivity and greater competitiveness.

Preparation of the European Council (23-24 March 2006)

Report on the quality of public finances

The Council aims to deliver conclusions providing the Economic Policy Council (EPC) with a mandate to continue examining the quality of public finances and promoting measures for their improvement. Based on the draft conclusions, three key areas will be addressed: 1) examining the role of budgetary rules and budgetary institutions (spending limits and rules in central government finances) when deliberating on and implementing spending priorities, 2) analysis of trends in public expenditure and 3) measuring the efficiency of public spending and analysing the indicators used to measure efficiency. According to the draft conclusions, the Council will address this matter again during the Finnish Presidency in autumn 2006. Finland endorses the conclusions.

Annual progress report on the Lisbon Strategy

The Commission will submit to the Council its strategic report on the national action plans for the relaunch of the Lisbon Strategy, which is to be released on January 25. The matter is due to be formally included on the Ecofin Council agenda in February.

In response to a proposal by France, the economic and finance ministers may also discuss issues related to the energy markets.

For further information, please contact Mr Sami Yläoutinen, Financial Counsellor, mobile phone no. +358 (0)40 735 1778.