Irish officials point out that there is no mention of adopting any of the tax changes, including on the common consolidated corporate tax base and the financial transactions tax. Ireland is opposed to both but has agreed to discuss the corporate tax base issue with its EU partners. Finance ministers will have a full debate on the financial transactions tax later in the month.
The EU leaders will put the spotlight on Europe’s economy, mainly trying to emphasis the need for greater growth and job creation rather than just austerity.
However, they will consider the rate at which countries are cutting their deficits to bring them into line with the need for budgets to be no more than 3% of GDP in deficit.
They will review a report on the member states’ budget and structural policies, the first phase of the new European semester, to identify any problems emerging in countries’ economies. They will identify the main economic challenges facing the EU and give strategic advice on policies.
While Ireland is out of this cycle because it is under the EU/IMF programme, the Government submitted its plans, targets and figures to the European Commission that considered them over the past few weeks.
Countries will take the recommendations into account when drawing up their medium-term budgetary strategies, and use it in drawing up their national reform programmes setting out the actions they will take to meet targets in areas such as employment, social inclusion and research and development spending.
The summit will endorse the five priorities set out by the Commission’s annual growth survey for member states to act on. They are to pursue differentiated, growth-friendly fiscal consolidation; restore normal lending to the economy; promote growth and competitiveness; tackle unemployment and the social consequences of the crisis; and modernise public administration.
They will return to this in July on the basis of each country’s programme to provide policy advice before countries finalise their budgets for next year.
Besides encouraging countries to keep their spending under control, this process is also aimed at meeting the aspirations of Europe 2020, the EU’s growth policy, such as increasing the employment rate to 75%.
A letter signed by the leaders of 12 countries setting out a range of growth-enhancing measures is also expected to be adopted and the Taoiseach will be pushing for as much of it as possible to be part of the meeting’s official conclusions, meaning it has to be followed up on regularly.
Finance ministers will meet before the summit to discuss the Greek second package. Decisions on increasing the firewall of the EU’s bailout funds will not be on the agenda, as Germany continues to have domestic difficulties. The council will revisit it later.
Council president Herman Van Rompuy will be returned for a second term of two-and-a-half years unopposed. He prepares the agendas for the EU leaders’ meetings, ensures that decisions are implemented and tries to get agreement on issues.
Tomorrow morning, the leaders of 25 countries including Ireland will sign the fiscal treaty. This is an official event but each country will have to ratify it which will go to a referendum in Ireland.