Testing EU unity

Stress-Tests

– The European Council agreed to publish the results of a stress-testing exercise on the EU's banking sector.
– The exercise is being carried out by the Committee of European Banking Supervisors (CEBS), an advisory body made up of national financial regulators in the EU.
– The CEBS exercise covers 25 financial institutions deemed to be of systemic importance to the EU's economy. The work is expected to be completed in early July and the European Council agreed that the results of the exercise should be published by the end of July.
– EU officials said that the scope of the exercise may be expanded, but that it would not affect the publication deadline.
– The EU's finance ministers will decide on 13 July how much data will be published. Leaders have already committed themselves, however, to ensure that bank-by-bank data is put into the public domain.

Economic Governance
– The heads of state and government agreed on the principles that should underpin the EU's planned strengthening of its economic governance in the wake of the eurozone debt crisis.
– Leaders agreed that, from 2011, they will submit details of their budgetary plans to the Commission and the EU's finance ministers for review each spring.
– Leaders also agreed on the need to reform the sanctions that can be applied to member states that have deficits in excess of the 3% of gross domestic product allowed under the EU's stability and growth pact. They called for a “coherent and progressive system” of sanctions. They agreed that the reformed sanctions regime would differentiate between member states that are in the eurozone and those that are not. They also agreed to “fully respect” language in the Lisbon treaty that formally exempts the UK and Denmark from sanctions.
– They also agreed that finance ministers and the Commission should attach equal importance to debt and deficit levels when deciding whether a member state is pursuing an irresponsible fiscal policy. Currently, the deficit level is used as the main indicator.
– The Commission was tasked by leaders with developing a scoreboard to monitor competitiveness divergences between member states.
– The principles will guide the work of a ministerial taskforce on economic governance reform that will report to EU leaders in October.
– The Commission said that it would present a policy paper on economic governance reform on 30 June, with a first set of proposals to follow in mid-September.

Financial Taxes
– EU leaders agreed that member states should place “systems of levies and taxes” on financial institutions, as part of their response to the financial crisis.
– Leaders asked the Commission and finance ministers to work out the details of how these charges would work, and report back to them by October. The details to be worked out include whether money should be raised against banks' profits, assets, or liabilities.
– The Commission has said that it will present draft legislation on the taxes and levies in early 2011.
– At the summit, the Czech Republic reserved the right not to introduce a tax or a levy.
– The Commission wants member states to put the money raised into ‘resolution funds' that would help banks in financial difficulties, but there was no agreement on this at the summit.
– Governments also agreed to push “strongly” for a global agreement on introducing bank levies and taxes at a summit of G20 leaders taking place on 26-27 June.
– EU leaders also agreed to “explore” with other countries the possibility of setting up an international tax on financial transactions (distinct from the taxes or levies that will be placed on financial institutions).

Growth and jobs
– Leaders agreed on the “headline” targets for Europe 2020, a ten-year programme for stimulating employment and economic growth.
– The targets are that, by 2020, the EU should raise the employment rate for men and women aged 20-64 to 75%, increase spending on research and development to 3% of its gross domestic product, increase the share of 30- to 34-year-olds having completed tertiary or equivalent education to at least 40%, reduce school drop-out rates to less than 10% of pupils, and lift at least 20 million people out of the risk of poverty or exclusion.
– The European Council agreed that member states should “rapidly” finalise national-level targets to meet the Europe 2020 goals.
– Leaders also reaffirmed the EU's goal of cutting greenhouse-gas emissions by 20%, compared to 1990 levels, by 2020.