This was the first time since February that ECOFIN ministers met in person and strict health precautions were observed.
Informal discussions kicked off with a working lunch, where ECOFIN ministers focused on the issue of “a sovereign Europe post-coronavirus”. Guest speaker Ivan Krastev from the Institute for Human Sciences in Vienna and the Centre for Liberal Strategies in Sofia had been invited to give introductory remarks on the subject. Mr Krastev explained that Europeans expect the EU to be able to provide answers and to have the ability to take action when it comes to dealing with the pandemic and to international developments. Nevertheless, people continue to also look to their national states. The discussion emphasised the importance of Europe cooperating and standing together in the face of current challenges, and that this will be crucial to strengthening the place of Europe and its values in the world.
German Minister of Finance Olaf Scholz said before meeting:
Strengthening the EU is a question of sovereignty. I look forward to working on this topic together with my European colleagues. The pandemic has shown the extent to which we are all dependent on one another. And this applies to Europe, too. No European country can overcome this crisis alone.
The meeting’s working sessions focused on four topics:
- Taking stock and the way forward for Europe’s recovery
- Own resources for the EU budget
- Fair and effective taxation in the EU
- Rethinking the financial markets in the digital age
Working session 1: Implementing Europe’s recovery: taking stock and the way forward
In the first session, the ministers looked at the post-lockdown state of the economy and its recovery, in the EU as a whole as well as in the individual member states. The discussion was introduced with an analysis of the economic situation by Daniel Gros, Director of the Centre for European Policy Studies (CEPS) in Brussels, and by Beatrice Weder di Mauro, Professor of International Economics in Geneva and President of the Centre for Economic Policy Research in London, who also gave an assessment of the situation in Europe and an overview of the state of the global economy. German Minister of Finance Olaf Scholz also stressed the importance of a European response to the economic fall-out from the coronavirus pandemic. It was noted in the closing round of remarks that, while the economy is already recovering, there continues to be uncertainty, not only in terms of the further course of the pandemic but also due to global developments such as trade conflicts. It was also stressed that an appropriate balance needed to be achieved between further fiscal support for the economic recovery on the one hand and the viability of public finances on the other hand.
Working session 2: Own resources for the EU budget
Following these talks, ministers had a chance to discuss own resources for the EU budget. Talks were held on this subject by guest speakers Professor Clemens Fuest (ifo Institute – Leibniz Institute for Economic Research at the University of Munich) and Professor Jean Pisani-Ferry (Professor of Economics at the Sciences Po Paris and of Economics and Public Management at the Hertie School in Berlin). German Finance Minister Olaf Scholz emphasised the importance of this debate. To help with the economic recovery and support reform and investment in the member states, the EU will be taking out substantial debt. Repaying these debts will require a discussion of the future shape of the own resources system. The majority of member states advocated new own resources. Particular emphasis was placed on the need for EU policies dealing with matters such as digital technology and climate change to be taken into account on the revenue side of the budget. The European Commission announced it would be presenting proposals on these matters in the first half of 2021.
Working session 3: Fair and effective taxation in the EU
On Saturday, the informal ECOFIN continued with a discussion on fair and effective taxation in the EU. A European architecture for fair and effective taxation will ensure that in a strong and sovereign European Union, competition can thrive in the internal market and beyond, and that the member states have sufficient financial resources at their disposal to finance measures for the common good of their citizens. There was broad consensus on this matter among the member states, who were in favour of providing continued support to the OECD’s work on fair taxation, which includes an effective minimum tax and fair taxation of the digital economy. The aim is to arrive at a solution at the global level and implementation at the European level.
Working session 4: Rethinking financial markets in the digital age
The EU economic affairs and finance ministers also talked about the need to rethink financial markets in the digital age. The influence exerted by data-driven business models (“big data”) and rapidly growing tech companies on financial market mechanisms is creating new challenges for the financial market order and data protection as well as new cybersecurity risks. A talk introducing the economic aspects of digital platforms on the financial markets was held by Professor Markus K. Brunnermeier of the University of Princeton. A special emphasis was placed on the need for Europe to act as a standard setter in this regard. The European Commission announced that it would be presenting proposals for a digital package including crypto-assets at the end of the month.