Press conference - Economic and Financial Affairs Council
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Council of the European Union European Council
Follow its sittingsSimon Harris
We had an exchange of views on last year's European Semester process, and the Commission reported on the implementation of financial services legislation across member states. And the G20 meetings, we discussed the most recent engagement in August and look ahead to the upcoming meeting in Bangkok next week, which will take place alongside the IMF World Bank annual meetings. And finally, we had the usual informal breakfast discussion at which we invited the Commission to respond to the letter from a group of member states concerning windfall taxes on energy company profits. It's ultimately the Commission's decision whether to bring forward a proposal in this regard. However, it was agreed that the issue warranted further investigation, further work at a technical level, and ministers have today mandated their officials to continue to explore this possibility alongside the Commission's plan to bring together a group on this issue.
Valdis Dombrovskis
Yes, thank you, Simon. Good afternoon, everyone. Well, first of all, we take note of the political agreement on the market integration and supervision package reached at today's meeting. From the Commission's side, we would have wished for a more ambitious outcome. But while there is still some way to go, today's agreement is an important step in the negotiations.
On a closely related point, we also held a constructive exchange on the competitiveness of Europe's banking sector. In line with our broader simplification agenda, the Commission wants streamlined rules for the banking sector. This means removing unnecessary complexity and duplications while preserving the hard-won resilience of our banking sector. We want our banks to compete on a level playing field with their international rivals and to support Europe's long-term growth, innovation, and strategic priorities.
The Commission will present its proposals for a banking competitiveness and simplification package in the first quarter of 2027. Now to the implementation of the economic governance framework. The Council today endorsed Czechia's revised medium-term fiscal structural plan. This follows the Commission's positive assessment in July, which found the plan to be in line with the requirements of the fiscal framework. The Council also adopted a recommendation broadening the national escape clause for Greece to cover measures to enhance energy security.
As we all know, sovereign bond yields across the globe have increased substantially in recent months. This makes sound fiscal policies more important than ever. So the Commission will continue to monitor budgetary developments in all Member States and will present our updated assessment in the upcoming European Semester autumn package. On Ukraine, I provided the regular update. The economic challenges facing Ukraine are intensifying as a result of Russia's relentless and brutal attacks, including on grain export routes in the Black Sea.
The EU has now paid 16.9 billion euros in budget support under the Ukraine support loan. With regards to macro-financial assistance, the Commission continues to work intensively with Ukrainian authorities to ensure that the agreed reforms are adopted and this will pave the way for the disbursement of the next installment. For the next year, we have already agreed with Ukraine to move swiftly on allocating 45 billion euros under the Ukraine support loan, subject to established conditions, and we are working on a financial strategy to come with a proposal to Council this autumn. So the EU is determined to keep playing its part. It is vital now that Ukraine's other international partners also honor their financial commitments as the country fights for its survival.
Turning to the Recovery and Resilience Facility. All 27 Member States have now submitted their final payment requests in line with the 30th of September deadline. 450 billion euros have already been disbursed to Member States, making a real difference on the ground for citizens and businesses across Europe. We are now focused on bringing the RRF to a successful conclusion. Over the coming weeks, the Commission will assess whether Member States have fulfilled more than 1,800 milestones and targets underpinning those final payment requests.
And this will pave a way for up to 123 billion euros to be disbursed by the end of the year. So time is short and the work is intense, but we are confident that with careful preparation and cooperation with Member States, we will be able to deliver. I will stop here. Thank you.
Speaker 2
Thank you, Commissioner. Okay, I'll now open the floor for questions and please state your name and media organization. And first to Paola, please.
Paola
Thank you. To the Commissioner, could you tell us if the Commission intends to put forward a proposal on windfall profit taxes and if so, what's the timeline? And to the Minister, how do you respond to criticism that this compromise on the MiSP was potentially less than what was wanted and also that it hinders an effective ESMA? Thank you.
Valdis Dombrovskis
Yes, so first on taxation as regards windfall profits, indeed we had a discussion. So from the Commission side, we believe that member states are best placed to take measures on taxation on windfall profits of energy companies. At the same time, we also agreed to set a working group to work on this question, to share the best practices and in a sense help assist the member states in that work.
Simon Harris
Yeah, I mean what has hindered Europe's progression of the single market and the deepening of the capital markets union and saving and investment union has been paralysis for decades and has been this romantic notion of waiting for the perfect and letting the perfect be the enemy of the good. That's not how the European Union works, it's not how democracy works, and it's not how 27 member states who come together to work on common issues work either. This is about finding pragmatic solutions for it and it's the job of a presidency to find a landing zone that commands significant support amongst member states rather than just opining about the perfect. And that's what we've done. We've engaged intensively in good faith with member states as they have engaged with us intensively and in good faith.
And everybody shared a common objective of getting this done. And the one market one Europe roadmap wasn't vague on this. It told us to get it done by the end of the year. And in July, I set ourselves a political, a public political deadline, always a dangerous thing to do, but a public political deadline of getting this done in October, and we've done this in October. But this is an ambitious outcome.
This is an ambitious outcome. It represents a significant transfer of supervisory responsibility to ESMA. It represents a substantial reform of ESMA's governance and powers. It also reflects the concerns expressed by ministers regarding important issues: accountability, proportionality, cost control, a meaningful involvement for national competent authorities. So the Council compromise strengthens the governance framework and powers of ESMA.
It provides the institutional foundations that are needed to support effective market integration and it ensures that ESMA can exercise its responsibilities in a clear, well-governed and robust manner. But at a time when Europe desperately and urgently needs to take action to stop the outflow of investment from our part of the world to other parts of the world at a time when our funding needs are only rising, it is so important that we move ahead. And I think to have done anything other than that would have been negligent, would have been a failure of political leadership by member states. And that's why we've discharged our responsibilities today in engaging in good faith and in detail with the Commission proposal. And I genuinely believe, as has been said so many times today by so many colleagues, more progress has been made now in the last 10 months on deepening capital markets in the European Union than has been made in the last decade.
Mathieu Bion
Yes, good afternoon, Matthew Bion, Agence Europe. On the banking competitiveness package, what measures do member states identify as a priority and do they expect a single package beginning of next year including some proposals on the finalization of banking union? Thanks.
Simon Harris
I might just start on that before handing to the Commissioner.
I think today was a good opportunity to have an in-depth discussion on the Commission's very welcome communication on banking competitiveness that was published in July. We had an informal discussion at ECOFIN last month in Dublin. But I do want to thank on behalf of member states and on behalf of the presidency the Commission for a comprehensive report that does now challenge us. It challenges us as ministers, it challenges us as member states to reassess the overall situation of the banking system in a single market, including that issue of competitiveness. This is a really important issue given the critical importance of the bank-based financing for businesses here in Europe, and enhancing our competitiveness obviously will require a strong and stable banking sector.
So I think from today and from our previous discussion, colleagues recognize that further integration in the banking sector is going to involve important trade-offs as set out in the Commission's report, and that a pragmatic approach is going to be needed to strike an appropriate balance. I think the discussion we had today, I certainly hope will be useful to the Commission in bringing forward its proposals, its legislative proposals that are due next year. And I think the Commission will have been left in no doubt that member states wish to engage in that in a constructive and helpful manner in feeding into that process. I think everybody was making the point that proposals to enhance banking competitiveness is in no way a return to light-touch regulation, the scars of which we've all lived through. But actually that competitiveness can be achieved while obviously preserving at all times the resilience of the banking system and maintaining financial stability.
So today I think was a chance for people to begin to set out their views. Obviously it'll be for the Commission now to bring forward its proposals and legislative proposals next year, including bringing forward new proposals on deposit insurance, fostering integration, reducing complexity as a number of ways forward. Commissioner.
Valdis Dombrovskis
Yes, indeed, as I have said, from the Commission's side we will present the banking competitiveness and simplification package in the first quarter of next year. It will cover aspects related to completing the Banking Union, related to market integration and related to simplification. Well, the exact structure of this package is still work in progress.
Diego Velazquez
Thanks, Diego Velazquez with the Luxemburger Wort to the presidency. How much negotiation space do you have on MiSP in view of the talks with the European Parliament, given that the European Parliament, it has no position yet, but will most likely want to push the text closer to the initial Commission proposal? Thank you.
Simon Harris
The first thing I would say is that all three institutions, the Commission, the Council and the Parliament have signed up to the same document. So One Market One Europe, the roadmap commits all of us to getting the job done when it comes to MiSP by the end of the year. The Commission did its job in bringing forward a proposal. The Council today has discharged its duties in adopting a general approach, a political agreement. And now quite rightfully and respectfully it will fall to the European Parliament to decide its position and then to prepare to enter trilogues.
My message to the European Parliament today is clear: we are ready to talk and we are ready to engage and we are ready to get on with the job of completing this vital file for the European Union and for deepening our capital markets. Obviously we're not going to engage in the trilogue process in a back-and-forth public way.
I very much respect their mandate and their role as co-legislators and obviously all trilogues involve engagement and negotiation. But what I can say is this, the position adopted by the Council today is one that has come from a position of strength. You will have followed because these discussions took place in public, the very, very significant if not overwhelming support for the compromise proposal. That doesn't mean every member state is delighted with every aspect of it, far from it, that's not a compromise, but a recognition from the member states that this is a good landing zone as well. So certainly we hope during our presidency to commence those negotiations and the trilogue process with the Parliament.
We would like to start that trilogue process as quickly as possible and we will approach that trilogue process with a strong mandate from the Council for the position that we've adopted today.
Speaker 2
Okay, I don't see any other hands up in the room so I'll go online and first to Jorge please.
Jorge Liboreiro
Hello, Jorge Liboreiro with Euronews. I hope you can hear me well. I have a question about support for Ukraine that both of you mentioned. Indeed your Ukrainian counterpart Sergii Marchenko has flagged a 78 billion hole in next year's accounting for the country and we see Russian escalation very much directed at Ukrainian economy to make it collapse. So do you think the time has come to restart the political debate on new financing for Ukraine?
Is there now a realization that the instruments that we have, the loan, the facility, the EPF will simply not be enough next year and we could see possible devastating consequences? Thank you.
Valdis Dombrovskis
Yes, thank you for this question. So first as I was mentioning for 2026 we see that we are able to broadly cover Ukraine's financing needs both as regards financial and military support. For 2027 the picture is indeed more challenging. So that's what we are discussing right now both with Ukrainian authorities, myself I had several engagement with Minister Marchenko but we are also in discussions with IMF to coordinate our approaches. It's clear that we are facing a sizeable funding gap.
Well the exact quantification is still work in progress. What we have agreed already in a sense is to frontload as a Ukraine support loan financing in 2027 which also gives us more time in a sense to look for additional sources of funding. As I was emphasizing also the importance of not only European Union but also other Ukraine's partners to play also their fair share of financing of Ukraine. As you remember already originally the idea for Ukraine support loan it was that it would be covering two thirds of Ukraine financing needs and we would expect other partners to cover remaining one third. But this is a topic which is obviously very important and will be working very intensively in the coming weeks.
Zoryana Stepanenko
Thank you so much for giving me the floor. Zoriana Stepanenko, Radio Free Europe's Ukraine service. It's a sort of follow up to Jorge's question that was preceding mine. So Commissioner, which options would you consider as most realistic for financing Ukraine's budget gap in 2027? Because we hear now growing calls from the European Union to G7 partners to step up in that regard.
But what if they don't? So how could the EU fill the gap and what option do you consider as the most realistic one? Thank you.
Valdis Dombrovskis
Well, as I was mentioning, in a short term, the most realistic option is to frontload the financing under Ukraine support loan within 2027 to make sure that a substantial part of this financing is available already in early 2027 for Ukraine, while we also look for other sources of funding and also we work with international partners. I would say that there is willingness of international partners to engage and to provide additional financing. Some countries, for example, Norway, already have announced very sizeable contributions. We are working with a number of other countries. It's also worth noting that a number of NATO countries have pledged also substantial military support to Ukraine, and it's important that then this military support also, so to say, materializes and is actually provided.
And so, and obviously we are also assessing other possibilities. In any case, the message also from today's Ecofin was clear, that we are committed to ensure that Ukraine has the necessary funding for as long as it's necessary.