L-R: Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union; Yuriko Backes, Luxembourg's Minister of Finance; Credit: MFIN

On Monday 5 and Tuesday 6 December 2022, Luxembourg's Minister of Finance, Yuriko Backes, took part in the meetings of the Eurogroup and the Economic and Financial Affairs Council (Ecofin) in Brussels, Belgium.

During the Eurogroup meeting, the 27 finance ministers first led a discussion on the macroeconomic outlook, which remains difficult and highly uncertain in the current context. They also discussed the European Commission's proposal which aims to better coordinate the response to soaring energy prices, by inviting Member States to target the various energy price curbs more to vulnerable people in order to to limit the budgetary cost and to preserve the incentives for a reduction in energy consumption.

Minister Backes said in this context: "The future development of the European economy will strongly depend on our response to the many challenges that arise. I generally welcome coordination efforts at European level, including to better take into account the impact that state support will have on public finances over time, while maintaining the flexibility to respond to national circumstances in each country".

The Eurogroup then examined the budgetary plans of the Member States, on the basis of the respective opinions of the European Commission. The latter also provided an update on post-programme surveillance for the five Member States which received financial assistance after the financial crisis, namely Cyprus, Spain, Portugal, Ireland and Greece. The ministers also re-elected Paschal Donohoe, Ireland's Finance Minister, as President of the Eurogroup for a second two-and-a-half year term.

At the Ecofin meeting, the agenda was modified following the observation by the Czech Presidency of the Council of the EU that the texts relating to financial assistance for Ukraine, with the exception of a regulation requiring only a qualified majority, and the approval of the directive on the implementation of the minimum taxation of multinational companies would not receive the necessary unanimity because of Hungary's veto. The Council also agreed to give itself more time to analyse the European Commission's assessment of respect for the rule of law in Hungary as well as to examine the Commission's opinion on the Hungarian recovery plan and resilience.

Minister Backes specifies on this subject that "the responsibility incumbent on the Council in this matter should not be taken lightly. The rule of law is the guarantor of the fundamental rights of our citizens and is at the centre of the values on which our union is built. The credibility of our control instruments is also at stake".

The Ecofin also examined for the first time the orientations of the European Commission on the subject of a reform of European economic governance, and more particularly of the rules of the Stability and Growth Pact. While welcoming the launch of the debates, many Member States expressed their reservations about such a fundamental overhaul and wondered about the resulting risks for consistent application of the relevant rules and equal treatment of Member States. Yuriko Backes specified in her speech that it is important to "know the ins and outs of the avenues put forward for the Member States" and that "the return to sustainable levels of public debt as well as the maintenance of sound public finances must remain at the heart of a reformed Stability and Growth Pact".

A debate on the draft revision of the directive on the taxation of energy allowed the ministers to highlight the economic, social and environmental sensitivities of the various Member States. As the last meeting of the Ecofin for the second half of the year, it was also an opportunity to discuss the progress made during the Czech Presidency.

On the sidelines of the Eurogroup and Ecofin meetings, Minister Backes met Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union. She also met with the Italian Minister of Economy and Finance, Giancarlo Giorgetti. Moreover, Luxembourg's Finance Minister and Attila György, State Secretary at Romania's Ministry of Public Finance, signed an addendum amending the double taxation agreement between Luxembourg and Romania.

The Board of Governors of the European Stability Mechanism (ESM) met ahead of the Eurogroup, for the first time since the appointment of Pierre Gramegna as Director General.