14 March 2013

European Council Conclusions: 14/15 March 2013

1. As agreed last December, Member States and the European Union are taking determined action to promote competitiveness, growth and jobs in accordance with the following priorities set out in the Annual Growth Survey:

(a) pursuing differentiated, growth-friendly fiscal consolidation;

(b) restoring normal lending to the economy;

(c) promoting growth and competitiveness;

(d) tackling unemployment and the social consequences of the crisis;

(e) modernising public administration.

2. Implementation continues to be the key. Determined action is required to underpin the strong political commitment to promote growth and jobs and to respond to fiscal, macro-economic and structural challenges. All of this should be reflected in Member States' National Reform Programmes and Stability and Convergence Programmes, taking full account of the discussions held in the Council in the framework of the European Semester on the Commission's Annual Growth Survey as set out in the Presidency Synthesis Report and in the relevant Council conclusions, as well as of the analysis provided by the Commission in the context of the macroeconomic imbalances procedure, including in the Alert Mechanism Report.

3. Substantial progress is being made towards structurally balanced budgets and that progress must continue. The European Council stresses in particular the necessity of differentiated growth-friendly fiscal consolidation, while recalling the possibilities offered by the existing fiscal rules of the Stability and Growth Pact (SGP) and the Treaty on Stability, Coordination and Governance (TSCG).

4. There should be an appropriate mix of expenditure and revenue measures at the level of the Member States, including short-term targeted measures to boost growth and support job creation, particularly for the young, and prioritising growth-friendly investment. In this connection, the European Council recalls that while fully respecting the SGP, the possibilities offered by the EU's existing fiscal framework to balance productive public investment needs with fiscal discipline objectives can be exploited in the preventive arm of the SGP.

5. Fiscal consolidation and restoring financial stability need to go hand-in-hand with welldesigned structural reforms aimed at promoting sustainable growth, employment and competitiveness and the correction of macroeconomic imbalances. In this context, the European Council recalls the importance of shifting taxation away from labour, where appropriate and recognising Member States' competences in this area, as a means of contributing to increasing employability and competitiveness.

6. In the context of challenging fiscal consolidation it is important to ensure that everybody pays their share of taxes. Renewed efforts are therefore needed to improve the efficiency of tax collection and to tackle tax evasion, including through savings taxations agreements with third countries and rapid progress in tackling the problem of VAT fraud. Close cooperation with the OECD and the G20 is needed to develop internationally agreed standards for the prevention of base erosion and profit shifting. To this end the EU will coordinate its positions.

Work should advance on pending tax files such as the proposals on energy taxation, on the common consolidated corporate tax base and on the revision of the Savings Tax Directive. The European Council notes that the work on the enhanced cooperation on a financial transaction tax is advancing.

7. As regards action taken at EU level, the guidelines decided by the European Council over recent months, particularly in the Compact for Growth and Jobs, must continue to be fully and urgently implemented, exploiting in particular the potential of a green economy to promote growth and competitiveness. The recent increase in the EIB capital by €10 billion will allow the Bank to lend an additional €60 billion in support to growth and jobs, and together with the European Investment Fund, this will help catalyse projects worth up to €180 billion in 2013-2015. The European Council will assess the implementation of the Compact in June, with a particular emphasis on measures aimed at creating jobs and on boosting the financing of the economy for fast-acting growth measures. In this respect, the Commission, together with the EIB, will report in June on the possibilities and on the targeted priorities that should be identified, in particular as regards infrastructure, energy and resource efficiency, digital economy, research and innovation and SMEs.

8. It is urgent to complete and implement the framework for better economic governance. The new legislation on fiscal and macro-economic surveillance (the "six-pack", the "two-pack" and the TSCG) must be used to the full. In particular, all necessary preparatory work must be carried out to ensure that these new rules are effectively applied from the beginning of the national budgetary cycles in 2013.

9. The European Council today gives specific emphasis to the following issues [abridged]:

(a) addressing unemployment is the most important social challenge facing us;

(b) the Single Market continues to be a key driver for growth and jobs. In this context, the European Council invites the Member States to take full account of the recommendations in the Commission's report on the state of integration of the Single Market and welcomes the Commission's intention to integrate such reporting into future Annual Growth Surveys;

(c) Further action is required to reduce the overall burden of regulation at EU and national levels, while always taking account of the need for proper protection of consumers and employees;

10. The European Council will hold, over the coming months, a series of thematic discussions on sectoral and structural aspects that are key to economic growth and European competitiveness. Such discussions will also feed into a debate next year on the Europe 2020 Strategy and the review of progress towards its headline targets. With a view to these discussions, it calls for preparatory work to be conducted giving priority to the following issues [abridged]:

(a) energy (May 2013);

(b) innovation (October 2013);

(c) digital agenda and other services (October 2013);

(d) defence (December 2013);

(e) industrial competitiveness and policy (June 2013 and February 2014).

Deepening EMU

11. The European Council took stock of the ongoing work on the four strands identified in its conclusions of December 2012 on the deepening of EMU. Any new steps towards strengthening economic governance will need to be accompanied by further steps towards stronger legitimacy and accountability.

12. Progress towards a more integrated financial framework is urgently needed to restore normal lending, improve competitiveness and help bring about the necessary economic adjustments. Further to the progress achieved on the new rules for banks' capital requirements, the remaining outstanding technical issues must be rapidly finalised in order to allow final agreement to be reached by the end of the month. Concluding the legislative process on the Single Supervisory Mechanism (SSM) within the coming weeks is a priority.

13. The European Council recalls that it is imperative to break the vicious circle between banks and sovereigns. As agreed in December 2012, an operational framework, including the definition of legacy assets, should be agreed as soon as possible in the first semester of 2013, so that when an effective single supervisory mechanism is established, the European Stability Mechanism will, following a regular decision, have the possibility to recapitalise banks directly. Agreement must be reached on the Bank Recovery and Resolution Directive and Deposit Guarantee Scheme Directive before June 2013, ensuring a fair balance between home and host countries. The Commission intends to submit by summer 2013 a legislative proposal on a Single Resolution Mechanism for countries participating in the SSM, to be examined as a matter of priority with the intention of adopting it during the current parliamentary cycle. It should ensure an effective framework for resolving financial institutions while protecting taxpayers in the context of banking crises, be based on contributions from the financial sector itself and include appropriate and effective backstop arrangements, in line with its conclusions of December 2012. The integrity of the Single Market will be fully respected and a level playing field will be ensured between Member States which take part in the SSM and those which do not.

14. The European Council takes note of the adoption of the rules for the organisation of the proceedings of the euro summits and welcomes the fact that these rules are intended to improve the quality of governance of the euro area while preserving the integrity of the European Union as a whole as recognised in particular by the relevant provisions of the TSCG.

Full conclusions

© European Council