EU Insight, 17 May 2024

Brussels, 17 May 2024

FINANCE MINISTERS DISCUSS THE FUTURE OF THE CAPITAL MARKETS UNION

EU Economic and Finance Ministers gathered this week in Brussels to discuss issues ranging from the use of frozen Russian assets in support of Ukraine to advancement of the Capital Markets Union. Notably, on the latter Ministers agreed on a path forward towards improving financial literacy amongst citizens with the aim of encouraging their safe participation in European capital markets. At the same time, Member States put forth a roadmap to guide discussions on the Capital Markets Union aiming to feed into the work of the next Commission. During the meeting ministers also adopted two key initiatives in the realm of taxation, aiming to adapt VAT to the digital age, and fast track cross-border tax refunds.

EUROPEAN COMMISSION RELEASES NEW FORECAST ON THE UNION’S ECONOMY

The European Commission published its Spring Economic Forecast, projecting the EU’s economic growth and macroeconomic stability. Overall, the Commission underlines that its projections remain surrounded by high uncertainty with potential risks to the EU’s economy originating from global geopolitical instability. Nonetheless, the report points to the EU’s positively revised economic growth projections, as well as the continued decline of inflation. The forecast also takes a global dimension as it assesses amongst others China’s economic trajectory and its impact on the global economy. In that light, the Commission emphasises the need for the EU to focus on strategic sectors, notably AI, for the EU to remain competitive vis a vis other major economies.

COMMISSION REPORTS ON SECURITY UNION AND INVESTS IN DEFENCE

The European Commission released its newest report on the Security Union. Overall, the report takes stock on the implementation of the EU’s Security Union Strategy, adopted in 2020 and running until 2025.To recall, the strategy extends along five main areas governing the EU’s internal security; the protection of the EU’s critical infrastructure against cyberattacks, the fight against terrorism and radicalisation, the fight against organised crime, the strengthening of cross-border cooperation, and the strengthening of relations with international partners on security issues. In a similar vein, the Commission announced the disbursement of €1 billion in EU funding to 54 defence research and development projects through the European Defence Fund, aiming to bolster the EU’s internal defence capabilities.

EU AND UK CONTINUE TALKS ON FUTURE COOPERATION AND GIBRALTAR

The European Commission’s Executive Vice-President Maroš Šefčovič and UK Foreign Secretary, and former Prime Minister, David Cameron met this week in the vein of continuous post-Brexit talks between the EU and UK. This week’s discussions focused on various aspects of the EU-UK Trade and Cooperation Agreement and continued EU-UK cooperation, such as the UK’s association with Horizon Europe and Copernicus programmes. Moreover, discussions also centred on Gibraltar where the EU (and particularly Spain) and the UK are yet to find a long-lasting agreement to ensure legal certainty and stability for the region. Lastly, both sides reaffirmed their willingness for continued cooperation, particularly considering geopolitical instability so close to home.

MEMBER STATES REACH POSITION ON NEW TOY SAFETY RULES

The Council adopted its position on renewed rules on toy safety. The initiative aims to reinforce existing legislation by further restricting specific harmful chemicals as well as requiring a new digital product passport for toys, to facilitate the enforcement of the rules. Overall, the revised rules aim to align the product specific requirements with the EU’s broader framework on general product safety, setting clearer rules for manufacturers, importers, and distributors. Additionally, the initiative mandates compliance from online marketplaces as distributors, deeming that if they sell non-compliant toys, they would be considered as distributing illegal content, as defined under the EU’s Digital Services Act.  Moving forward, the Council’s adoption puts pressure on the new Parliament to finalise its position after the dust is settled from the European elections.

COMING UP NEXT WEEK

• 21 May: 8th EU-Republic of Moldova Association Council. On the agenda: bilateral relations, accession process, cooperation and convergence
• 21 May: General Affairs Council. On the agenda: preparations for the European Council meeting on 27 and 28 June 2024 and discussing an annotated draft agenda.
• 21 May: Transport, Telecommunications and Energy Council. On the agenda: approach for consistent legislation in the digital field, the future of EU’s digital policy and cybersecurity.
• 22 May: College of Commissioners. On the agenda: future of EU agriculture and European Health Union prepares, prevents and protects.
• 23 May: Competitiveness Council (Space, research and innovation). On the agenda: Space law, and strengthening Europe’s competitiveness through space.
• 24 May: Competitiveness Council (Internal market and industry). On the agenda: the future of EU industry policy

Karl Isaksson, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • X: @KreabEU  •  LinkedIn: Kreab Worldwide