Eurozone finance ministers consider Fiscal Union

Brexit

Finance ministers in the devolved regions of the UK and across the EU, have signalled their intention to move forward on plans for implementing a new approach to budgeting and fiscal planning, now that the UK has voted to leave the EU. Information released after the discussion shows that the finance ministers have raised concerns over the current and future role of the three European Supervisory Authorities (ESAs) in relation to financial supervision and the banking union.

The European Parliament’s budgets and economic and monetary affairs committees held a debate yesterday on the need for a euro area budget with finance ministers from France, Italy, Netherlands, Luxembourg, Slovakia, Malta and Greece.

The document states: ‘In the case of European Banking Authority (EBA), sufficient resources should be provided for in the 2017 draft budget to prepare a relocation away from London when the UK withdraws from the EU.’

Separately, the French finance minister Michel Sapin has issued a warning about plans announced by Chancellor George Osborne to cut the UK rate of corporation tax from the current level of 20% down to 15% in an attempt to increase the UK’s attractiveness to business.

Sapin suggested the move could result in other countries seeking to reduce their rates, and indicated it would be regarded as a negative step in advance of talks on whether or not UK firms will retain the ‘passporting’ scheme for selling financial services in the EU.

Meanwhile, finance ministers from the three devolved administrations have written to Chancellor George Osborne seeking an urgent meeting to discuss their concerns around the EU referendum result and the resulting impact on devolved budgets.

Welsh government cabinet secretary for finance Mark Drakeford, Scottish government finance secretary Derek Mackay, and Northern Ireland minister of finance Máirtín Ó Muilleoir met in Cardiff, where they agreed to work together on important financial issues of common interest, in particular against further cuts that might be pursued post referendum by the UK government and to seek firm commitments on continued EU related funding streams.

Drakeford said: ‘The referendum result has raised a number of uncertainties common across all our devolved administrations. It is clear that it will have an impact on the UK’s fiscal position and this will inevitably impact on our devolved budgets.’

The finance ministers present were Jeroen Dijsselbloem (Netherlands, also Euro Group President), Michel Sapin (France), Pier Carlo Padoan (Italy), Pierre Gramegna (Luxembourg), Peter Kažimír (Slovakia), Edward Scicluna (Malta) and Euclid Tsakalotos (Greece).

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