I. COMMON SECURITY AND DEFENCE POLICY
II. ECONOMIC AND SOCIAL POLICY
The European Council welcomed the general approach reached by the Council on the Single Resolution Mechanism, which will be a cornerstone of the Banking Union. The European Council reviewed the economic situation and the progress in implementing the Compact for Growth, Jobs and Competitiveness. The European Council also identified the main features of the Partnerships for Growth, Jobs and Competitiveness to support structural reform, with a view to concluding discussions by October next year.
23. The European Council welcomes the 2014 Annual Growth Survey and the Alert Mechanism Report presented by the Commission. It acknowledges that while the economic recovery is still modest, uneven and fragile, the economic outlook is gradually becoming more positive.
Differentiated, growth-friendly fiscal consolidation, internal rebalancing and banks' balance sheet repair are all further progressing. Unemployment has stabilised, albeit at unacceptably high levels. Determined and ambitious implementation of agreed policies will support economic recovery and job creation in 2014 and 2015.
24. Member States and the European Union will continue to take determined action to promote sustainable growth, jobs and competitiveness in accordance with the five priorities set out in the Annual Growth Survey.
25. The Annual Growth Survey identifies areas where important challenges prevail and where further progress is needed. Specific attention should be given to enhancing the functioning and flexibility of the single market for products and services, improving the business environment, and further repairing banks' balance sheets with a view to addressing financial fragmentation and restoring normal lending to the economy. Priority should be given to enhancing competitiveness, supporting job creation and fighting unemployment, particularly youth unemployment including through the full implementation of the youth guarantee, and to the follow-up of reforms regarding the functioning of labour markets.
Policies should focus in particular on:
reinforcing tax and other incentives for job creation, including shifting taxes away from labour;
extending working lives, increasing labour market participation, stepping up active labour market measures and continuing to modernise education and training systems, including life-long learning and vocational training;
ensuring that labour cost developments are consistent with productivity gains;
addressing skills mismatches;
increasing labour mobility.
Policies fostering innovation and leading to productivity gains remain crucial.
Implementation of the Compact for Growth and Jobs
26. The Compact for Growth and Jobs agreed in June 2012 remains one of the EU's major tools aimed at re-launching growth, investment and employment as well as making Europe more competitive. The implementation of the Compact remains the key element to fulfil these objectives. While substantial progress has been achieved in a number of areas, efforts should continue to ensure that the potential of the Compact is used to its fullest extent. This should be kept under regular review by the Council. The European Council also welcomes the adoption of the 2014-2020 Multiannual Financial Framework and associated financial programmes which support the achievement of the Europe 2020 Strategy.
The fight against youth unemployment remains a key objective of the EU strategy to foster growth, competitiveness and jobs. In this context, the European Council calls on Member States that have not yet submitted their Youth Guarantee Implementation Plans to do so without delay. It recalls its commitment to make the Youth Employment Initiative (YEI) fully operational by January 2014.
Restoring normal lending to the economy, in particular to SMEs, remains a priority. The European Council welcomes the implementation of the EIB capital increase enabling the bank to step up its lending across the EU by 38%, to EUR 62 billion this year. It also welcomes the support by the EIB Group in 2013 of EUR 23.1 billion for SME businesses and mid-cap companies throughout the EU 28. In line with its October 2013 conclusions, the European Council reiterates its call to launch the SME initiative in January 2014, while work should continue on further developing tools for the future. It calls on the Member States participating in the SME initiative to inform the Commission and the EIB about their contributions by the end of the year. Against this background, it welcomes the EIB's new mandate to the European Investment Fund (EIF) of up to EUR 4 billion and calls on the Commission and the EIB to further enhance the EIF capacity through an increase in its capital with a view to reaching final agreement by May 2014.
The European Council calls for enhanced efforts in particular as regards the swift adoption of remaining legislation under the Single Market Acts I and II, and the swift implementation of the measures they contain. It specifically calls on the co-legislators to swiftly come to an agreement on the last two outstanding legislative proposals under Single Market Act I ("posting of workers" and "e-identification").
The European Council also calls for further action to reduce the burden of regulation through the implementation and further development of the REFIT programme and looks forward to agreeing further steps in this direction at its June meeting. It will return to the issue annually in the framework of the European Semester.
27. Recalling its conclusions of May 2013, the European Council calls for further progress at the global and EU levels in the fight against tax fraud and evasion, aggressive tax planning, base erosion and profit shifting (BEPS) and money laundering. The European Council welcomes work undertaken in the OECD and other international fora to respond to the challenge of taxation and ensure fairness and effectiveness of tax systems, in particular the development of a global standard for automatic exchange of information, so as to ensure a level playing field.
Building on the momentum towards more transparency in tax matters, the European Council calls on the Council to reach unanimous political agreement on the Directive on administrative cooperation in early 2014. It calls for speeding up the negotiations with European third countries and asks the Commission to present a progress report to its March meeting. In the light of this, the revised Directive on the taxation of savings income will be adopted by March 2014. The European Council takes note of the Council report to the European Council on tax issues, welcomes the establishment by the Commission of the High Level Expert Group on Taxation of the Digital Economy, and invites the Commission to propose effective solutions compatible with the functioning of the Internal Market, taking into account the work of the OECD, and to report back to the Council as soon as possible.
Progress should also be made quickly towards agreement on amending the Parent-Subsidiary Directive.
The European Council calls for further progress on the disclosure of non-financial information by large groups.
III. ECONOMIC AND MONETARY UNION
28. Since the presentation last December of the report "Towards a genuine EMU" work has progressed on the key building blocks to strengthen the architecture of the Economic and Monetary Union (EMU). The European Council has focused its discussions on the banking and economic union. This process builds on the EU's institutional framework, in full respect of the integrity of the Single Market while ensuring a level playing-field between EU Member States. It will be open and transparent towards Member States not using the single currency.
29. The European Council welcomes the final agreement reached by the legislators on the Deposit Guarantee Scheme Directive and the Bank Recovery and Resolution Directive. It also welcomes the general approach and the specific conclusions reached by the Council on the Single Resolution Mechanism (SRM). Alongside the already adopted Single Supervisory Mechanism, the SRM will represent a crucial step towards the completion of the Banking Union. The European Council calls on the legislators to adopt the SRM before the end of the current legislative period.
Partnerships for Growth, Jobs and Competitiveness
30. Significant progress in economic governance has been achieved in recent years. The Europe 2020 Strategy and the European Semester constitute an integrated process of policy coordination to promote smart, sustainable and inclusive growth in Europe. In the euro area, the coordination of economic policies needs to be further strengthened to ensure both convergence within the EMU and higher levels of sustainable growth. Closer coordination of economic policies will help detect economic vulnerabilities at an early stage, and allow for their timely correction.
31. To achieve this, it is essential to increase the level of commitment, ownership and implementation of economic policies and reforms in the euro area Member States, underpinned by strong democratic legitimacy and accountability at the level at which decisions are taken and implemented.
32. In this context, it is crucial to facilitate and support Member States' reforms in areas which are key for growth, competitiveness and jobs and which are essential for the smooth functioning of the EMU as a whole. Partnerships based on a system of mutually agreed contractual arrangements and associated solidarity mechanisms would contribute to facilitate and support sound policies before countries face severe economic difficulties.
33. This system would be embedded in the European Semester, open to non euro area Member States and fully compatible with the Single Market in all aspects. It would apply to all euro area Member States except for the Member States subject to a macro-economic adjustment programme.
34. Mutually agreed contractual arrangements would cover a broad range of growth and job-enhancing policies and measures, including the performance of labour and product markets, the efficiency of the public sector, as well as research and innovation, education and vocational training, employment and social inclusion. They would reflect the economic policy priorities identified in the European Council's shared analysis of the economic situation in the Member States and the euro area as such, and take into account the country-specific recommendations.
35. The system of partnerships would include associated solidarity mechanisms offering support, as appropriate, to Member States engaging in mutually agreed contractual arrangements, thus helping investment in growth and job-enhancing policies.
36. Further work will be pursued on the basis of the following main features:
Mutually agreed contractual arrangements will be a "home-grown" commitment which constitutes a partnership between the Member States, the Commission and the Council. The National Reform Programme submitted by each Member State in the context of the European Semester will be the basis for the mutually agreed contractual arrangements, also taking into account the Country Specific Recommendations. Mutually agreed contractual arrangements will be tailored to the needs of each individual Member State and will focus on a limited number of key levers for sustainable growth, competitiveness and job creation. The economic policy objectives and measures included in the mutually agreed contractual arrangements should be designed by the Member States, in accordance with their institutional and constitutional arrangements, and should ensure full national ownership through appropriate involvement of national parliaments, social partners, and other relevant stakeholders. They should be discussed and mutually agreed with the Commission, before being submitted to the Council for approval. The Commission will be responsible for keeping track of the agreed implementation of the mutually agreed contractual arrangements on the basis of jointly agreed timelines.
On the associated solidarity mechanisms, work will be carried forward to further explore all options regarding the exact nature (e.g. loans, grants, guarantees), institutional form and volume of support while ensuring that these mechanisms do not entail obligations for the Member States not participating in the system of mutually agreed contractual arrangements and associated solidarity mechanisms; they should not become an income equalisation tool nor have an impact on the Multi-annual Financial Framework; they should respect the budgetary sovereignty of the Member States. Any financial support agreement associated with mutually agreed contractual arrangements will have a legally binding nature. The President of the EIB will be associated to this work.
37. The European Council invites the President of the European Council, in close cooperation with the President of the European Commission, to carry work forward on a system of mutually agreed contractual arrangements and associated solidarity mechanisms, on the basis of the orientations above, and to report to the October 2014 European Council with a view to reaching an overall agreement on both of these elements. The Member States will be closely associated to this work.
Social dimension of the EMU
38. The European Council reiterates the importance of employment and social developments within the European Semester. On the basis of work undertaken by the Council, the European Council confirms the relevance of the use of a scoreboard of key employment and social indicators as described in the Joint Employment Report.
39. Work must also continue speedily on the use of employment and social indicators along the lines proposed by the Commission with the objective of using these new instruments in the 2014 European Semester. The use of this wider range of indicators will have the sole purpose of allowing a broader understanding of social developments.
40. Further measures to enhance the social dimension in the euro area are voluntary for those outside the single currency and will be fully compatible with the Single Market in all aspects.
IV. MIGRATION FLOWS
V. ENLARGEMENT AND THE STABILISATION AND ASSOCIATION PROCESS
VI. EXTERNAL RELATIONS
VII. OTHER ITEMS
Full Council conclusions
Lithuanian Presidency: As Europe recovers, more momentum is needed
Remarks by President van Rompuy after the Council
Remarks by President Herman Van Rompuy following the first session of the European Council
Remarks by President Barroso
© European Council
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