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Finance and Monetary Affairs in the EU

Latest news on economic and monetary affairs in the European Union.

Testing the EU fiscal surveillance
Real-time estimates of the potential output are essential in the EU fiscal surveillance framework. They are used for the calculation of the cyclically-adjusted budget balance, one of the main indicators in the assessment of the fiscal performance of EU Member States. Our paper examines whether and how different degrees of smoothness of potential output would have supported different decisions in the EU budgetary surveillance in terms of both timing and substance. The results of our simulations show that, the accuracy of the diagnostic instruments especially those that measure the risk of breaching the 3% of GDP reference value of the Treaty is surprisingly robust. Only a very high and excessive degree of smoothing of potential output would significantly reduce the reliability of the surveillance indicators. In the light of our results a somewhat higher degree of smoothing compared with the current practice would not seem to be harmful for EU fiscal surveillance. During economic upturns it would guaranty a higher degree of caution by signalling larger and possibly longer periods of economic 'good times' which would in turn warrant more fiscal consolidation.

Eurobarometer on Safer Internet for Children: qualitative study 2007
In a pan-European qualitative study covering 29 European countries, children of 9-10 and 12-14 years old were interviewed about their use of online technologies, such as the Internet and mobile phones, and how they see and deal with risks. The study was commissioned by the European Commission and covers 29 countries (the 27 Member States, as well as Iceland and Norway). It aims at improving knowledge about Internet usage by children, as well as mobile phone usage (by those who own a mobile phone); their on-line behaviour; their perceptions of risk and safety related questions. The results of the study are to be used to contribute to designing the EU's Safer Internet Programme, and to increase the impact of awareness building actions.

EU crop yield forecasts for 2007
he European Commission's in-house scientific service, the Joint Research Centre (JRC), on 25 July 2007 released its annual crop yield forecast for Europe. The central prediction is that the 2007 total cereal harvest will be 276 million tonnes or 1,6 per cent below the average of the last five years with Central and Eastern Europe losing out the most. This Memorandum provides information, maps and graphs on the forecast of cereal production. During the agricultural season, the European Commission's Joint Research Centre (JRC) regularly issues forecasts for the main crop yields and produces analyses of the impact of weather conditions on crop production. These are based on advanced methodologies using satellite remote sensing and mathematical models which simulate crop growth.

State aid for airports and start-up aid to airlines - questions & answers
In September 2005 the European Commission adopted "Community guidelines on financing of airports and start-up aid to airlines departing from regional airports" (hereinafter the 2005 aviation guidelines). These guidelines were put in place to codify Commission practice and to take account of changes which had taken placed in the European aviation market. The 2005 guidelines reflect the jurisprudence of the "Aeroports de Paris" cases wherein the European Courts have clarified that airport management and operation activities consisting in the provision of airport services to airlines and to the various service providers within airports are economic activities. The guidelines also reflect the competitive situation of the fully liberalised air transport market in place since the completion of the third aviation liberalisation packet in the 1990s.

Solvency II guide
The European Commission on 10 July 2007 proposed a ground-breaking revision of EU insurance law designed to improve consumer protection, modernise supervision, deepen market integration and increase the international competitiveness of European insurers. Under the new system, known as 'Solvency II', insurers would be required to take account of all types of risk to which they are exposed and to manage those risks more effectively. In addition, insurance groups would have a dedicated 'group supervisor' that would enable better monitoring of the group as a whole. The Commission aims to have the new system in operation in 2012. This proposal is part of the Commission's Better Regulation strategy and its firm commitment to simplify the regulatory environment and cut red tape. It will mean replacing 14 existing directives with a single directive. The proposal now passes to the European Parliament and Council for consideration.

Euro site
The euro, Europe’s single currency, is the currency of 13 European Union countries: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovenia and Finland. Euro banknotes and coins have been in circulation since 1 January 2002 and are now a part of daily life for 315 million Europeans living in the euro area.

EC Communication on VAT reduced rates – Frequently Asked Questions
The European Commission has launched a political debate on how to simplify current EU legislation on reduced VAT rates. In a Communication adopted on 5 July 2007, it considers that there is a real need for a simplification and rationalisation of the current VAT rates structure, in particular the reduced VAT rates. It believes that there is a place for more flexibility which would allow Member States to apply VAT reduced rates to local supplies. On the other hand, it says this flexibility needs to be balanced to ensure the proper functioning of the Internal Market and to avoid disproportionate compliance costs for business. To this extent, possible ways are put forward but no concrete proposal is made for new categories of products or services, given the need for prior political consideration by Member States. At the same time, the Commission proposes to extend, until the end 2010, most of the derogations which are about to come to an end.

Commission anti-trust decision against Telefonica - frequently asked questions
European Commission fine of EUR 151 million against Spanish telecom group Telefonica.

The SWIFT case and the American Terrorist Finance Tracking Program
After the 11th September 2001 terrorist attacks, the United States Department of the Treasury ("U.S. Treasury") developed the "Terrorist Finance Tracking Program" ("TFTP"). The TFTP is based on United States statutory mandates and Executive Orders authorising the U.S. Treasury to use appropriate measures to identify, track and pursue those who provide financial support for terrorist activity.

European Commission prohibition of Ryanair's proposed acquisition of Aer Lingus – frequently asked questions
The European Commission on 27 June 2007 prohibited, on the basis of the EU Merger Regulation, the proposed takeover by Ryanair of Aer Lingus. It says the acquisition would have combined the two leading airlines operating from Ireland which currently compete vigorously against each other. The Commission concluded that the merger would have harmed consumers by removing this competition and creating a monopoly or a dominant position on 35 routes operated by both parties. This would have reduced choice and, most likely, led to higher prices for more than 14 million EU passengers using these routes to and from Ireland each year. The Commission's investigation and market test of remedies offered by Ryanair demonstrated that these remedies were inadequate to remove the competition concerns. In particular the limited number of airport "slots" offered was not likely to lead to competition sufficient to replace the competitive pressure currently exercised by each airline on the other. The Commission therefore concluded that the concentration would significantly impede effective competition within the European Economic Area or a substantial part of it.

European Court of Auditors Special Report No 2/2007
European Court of Auditors on Special Report No 2/2007 concerning the Institutions' expenditure on buildings

Taxation trends in the EU 2007
This report contains a detailed statistical and economic analysis of the tax systems of the Member States of the European Union and Norway.

European Globalisation Adjustment Fund (EGF)
The EGF aims to help workers made redundant as a result of changing global trade patterns to find another job as quickly as possible. The fund was launched by the European Union in 2007 and will provide up to 500 million euro a year in support.

Preliminary draft budget 2008
European Union Budget online

EU cash controls
The EU Council of Ministers on 12 July 2005 adopted a Regulation which aims to introduce an EU-wide approach to controlling cash movements into and out of the EU. The Regulation is applicable in all Member States as of 15 June 2007. It obliges travellers entering or leaving the Community and carrying any sum equal or more than EUR 10,000 (or its equivalent in other currencies or easily convertible assets such as cheques drawn on a third party) to make a declaration to the customs authorities.

EU Humanitarian Aid: Frequently asked questions
The European Commission on 13 June 2007 adopted a Communication paving the way for greater efficiency and coherence in delivering humanitarian aid. The Commission is calling for the European Union to work more closely together on a consensus that would boost its collective response to humanitarian crises. This includes advocating full respect for international humanitarian law, so that aid and aid workers can reach people in need.

Stabilisation and Association Agreements : frequently asked questions
As the number of countries running excessive budgetary deficits diminishes, the European Commission believes it is of the utmost importance that national governments in the European Union take advantage of the good economic times to progress rapidly towards the objective of sound and sustainable budgetary positions. Under current policies, only 10 of the 27 EU countries will have reached their medium-term budgetary objective in 2008 despite three consecutive years of above-trend economic growth. To improve the functioning of the 'preventive arm' of the Stability and Growth Pact, therefore, the Commission on 13 June 2007 made a number of proposals which build on the 2005 SGP reform. They deal with the way governments formulate and implement their budgetary strategies over the medium term and the strengthening of surveillance and coordination of economic and budgetary policies at EU level. The aim is to achieve sustainable budgetary policies that contribute to higher growth and employment.

China - EU trade - background note
EU Trade Commissioner Peter Mandelson met Chinese Commerce Minister Bo Xilai in Brussels on 12 June 2007 for the annual EU-China Joint Trade Ministerial Meeting. China and the EU have one of the fastest growing trading relationships in the global economy: Europe is now China's largest trading partner, and China Europe's largest source of manufactured imports. The Minister and the Commissioner reviewed bilateral trade relations. Commissioner Mandelson urged his Chinese counterpart to continue to address barriers to EU exporters and investors in the Chinese market and to protect EU businesses in China from intellectual property theft. Although China has now been in the WTO for six years, EU exporters and investors continue to face persistent problems entering and operating in the Chinese market.

European Commission Technical Assistance Office for the West Bank and Gaza Strip
The EU’s relationship with the region, and the Palestinians in particular has grown deeper over the past decades. The EC hopes that this relationship will be successful in helping pave the way towards a just peace and a Palestinian State in the near future. The website of the European Commission Technical Assistance Office for the West Bank and Gaza Strip contains information about the role of this office and various areas of cooperation with the Palestinian Authority. You will find an overview of the EU’s activities and relevant information on EC’s assistance and programmes. It is designed to provide easy and accessible information on the EU in general, its external relation policies, its institutions and its activities.

State aid: SMEs insist on the need to polish "general block exemption"
UEAPME, the European craft and SME employers' organisation, presented the European Commission today with its comments on the first draft "General Block Exemption Regulation" (GBER) on State aid.

Risk-Sharing Finance Facility (RSFF) – Questions and answers
On 5 June 2007, the European Commission and the European Investment Bank (EIB) signed a cooperation agreement establishing the new risk-sharing finance facility (RSFF) to support research & innovation in Europe. This new instrument is designed to help to make more financing available for promoters of research & innovation projects, which often face more difficulties than traditional business sectors in accessing finance, due to the relatively high levels of uncertainty & risk inherent to their activity. The RSFF, part of the EU's 7th Research Framework Programme (FP7) & EIB’s programme for Research & Innovation, will partially cover the financial risks assumed by the EIB when financing this type of activity. The contribution of EUR 1 billion each from FP7 & the EIB will therefore unlock billions of additional financing in this area.

Risk Sharing Finance Facility (RSFF)
The European Commission and the European Investment Bank (EIB) have joined forces to set up the Risk Sharing Finance Facility (RSFF). RSFF is an innovative scheme to improve access to debt financing for private companies or public institutions promoting activities in the field of: * Research, Technological Development Demonstration, and * Innovation investments. * RSFF is built on the principle of credit risk sharing between the European Community and the EIB and extends therefore the ability of the Bank to provide loans or guarantees with a low and sub-investment grade risk profile (involving financial risks above those normally accepted by investors). The scheme also provides a wealth of opportunities for new and innovative EIB financing solutions directed at the private sector and the research community as a whole.

2006 customs seizures of counterfeit goods – Frequently Asked Questions
Statistics just published by the European Commission show a significant increase in the amount of counterfeit and pirated articles seized at the EU's external borders in 2006. Customs officials seized more than 250 million of such articles in 2006 compared with 75 million in 2005 and 100 million in 2004. Medicines, cigarettes and other goods that can seriously damage the health of consumers continue to be faked in large quantities. Changes in the routes used by criminals to trade in fake goods, the use of the internet and the transport of small quantities by air or postal traffic make customs job even more challenging. However, customs' reply has never been as high as in 2006 with more than 36.000 seizures, an increase of around 40% compared with 2005.

Community-wide statistics for 2006
The latest Customs statistics published by the European Commission show that counterfeiting and piracy continue to be a alarming threat in Europe. Customs seized around 250 million articles in 2006 , and the number of customs cases involving fakes increased to 36.486. Growth in seizures of fakes dangerous to health and safety also continued. In 2006, more than 2,7 millions counterfeit medicines and more than 1,58 millions counterfeit cosmetics and personal care products were seized.

Bush names Zoellick as new World Bank chief
U.S. President George W. Bush has named Robert Zoellick, a former trade representative and top diplomat as his nominee to head the World Bank.