ECOFIN COUNCIL: MINISTERS SET TO ENDORSE REPORT ON QUALITY OF PUBLIC FINANCES.

• Position: Economic and Financial Committee

In substance, the EPC has drawn two conclusions following its analysis of public finances in 17 member states. Its first observation is that countries which have managed to keep tight fiscal discipline "have been able to effectively direct their resources towards those sectors identified as priorities" (R&D, education and investment). That said, the EPC notes that "in practice, these priorities are easily diverted owing to pressure from various sources" (lobbies, and election deadlines, etc.) during the drafting of budgetary programmes. The final results are therefore often mixed. The EPC also notes that states which led the way in adopting institutional reforms by introducing new spending rules and budget performance models "have proved more successful in redirecting public spending according to their national priorities".

On the basis of this observation, the Council draws several conclusions outlined in a provisional paper acquired by Europe Information:

-1. The Council recalls that implementing a policy of consolidating public finances "can contribute" to energising growth and employment in line with the revised Lisbon Strategy. However, careful to respect the member states' sovereignty in this area, the Council also recalls that the composition of public finances along with budgetary and fiscal rules remain the responsibility of individual member states, even though their impact is closely tied to European economic governance.

-2. Having taken these precautions, the Council endorses the EPC's conclusions concerning countries that have succeeded in reforming and which are therefore better armed to face future challenges (ageing populations, impact of growth in spending on healthcare and pensions, etc.).

-3. Far from closing the debate, the Council...