EU Insight 10 November, 2022

Brussels, 10 November 2022

COMMISSION SETS OUT ORIENTATIONS FOR EU ECONOMIC GOVERNANCE REFORM

The Commission issued a communication of a reform of EU economic governance seeking to strike a balance between the reality of high debt in much of the single currency area and the demand for more credible enforcement. The new rules are set to offer more room for countries to cut excess debt while also introducing sanctions in case of non-compliance. The legislative proposal underpinning the project will come out in Q1 2023 albeit the key question is whether a consensus can be reached among EU capitals before the end of the current legislature.

CO-LEGISLATORS AGREED ON STRONGER EMISSION REDUCTION TARGETS UNDER FIT FOR 55

Parliament and Council agreed on stricter regulation of greenhouse gas emissions in member states including less flexibility and more transparency. Notably, negotiators agreed to increase the mandatory GHG reduction 2030-target at the EU level from 30% to 40% compared to 2005-levels. Furthermore, rules will offer fewer possibilities to transfer, borrow and bank emission allowances. Also, co-legislators aim to hold Member States more accountable and enhance transparency by making information public on national actions in an easily accessible form. In addition, the deal focuses on ensuring a just and socially fair transition for all, and the need to close loopholes so the EU Climate Law is not undermined.

COMMISSION SUGGESTS CONCESSIONAL LOANS TO UKRAINE FOR 2023 OF UP TO €18 BILLION The Commission proposed a financial support package for Ukraine of up to €18 billion for 2023. This will come in the form of highly concessional loans, disbursed in regular instalments as of the beginning of next year. This financial assistance– averaging €1.5 billion per month – will help cover a significant part of Ukraine’s short-term funding needs for 2023. According to the Commission, Ukraine will be able to keep on paying wages and pensions and maintain essential public services running. The proposal is pending approval from the Parliament and Member States.

EU FINANCE MINISTERS DISCUSS BANKING RULES, TAXATION, AND UKRAINE

At its regular monthly meeting, EU finance ministers reached an agreement on the Council’s position on the revision of the EU banking sector rules which aims to enhance the credit institutions’ resilience and strengthen their supervision and risk management. Also, ministers broadened the scope of the code of conduct used to identify harmful taxation in Member States and agreed on the taxation of heavy goods vehicles with an aim to encourage cleaner road transport and reduce congestion. Lastly, ministers discussed a prospect for monthly EU financial assistance disbursements for Ukraine starting in January 2023.

COMMISSION AIMS TO ENSURE ACCESS TO FERTILISERS TO ENHANCE FOOD SECURITY

The Commission presented its Communication on ensuring availability and affordability of fertilisers. The Communication gives guidance to tackle the challenges that EU farmers are facing, in the context of Russia’s invasion of Ukraine, and the global fertilisers and energy crises. Such actions include targeted financial support, sustainable farming practices, the use of organic fertilisers, and improved market transparency. Furthermore, the Commission will together with member states examine the possibility of making use of the agricultural reserve worth €450 million for the financial year 2023 for farmers affected by high input costs.

COMING UP NEXT WEEK

• 14 November: Foreign Affairs Council. On the agenda: Russian aggression against Ukraine, the Great Lakes region, and Western Balkans.
• 15 November: EU-Kyrgyzstan Cooperation Council. On the agenda: EU-Kyrgyz Enhanced Partnership and Cooperation Agreement.
• 15 November: Foreign Affairs Council (Defence). On the agenda: Briefing on current affairs, defense capabilities, exchange of views with the NATO Secretary General.
• 15-16 November: G20 Summit. On the agenda: Global Health Architecture, Digital Economy Transformation; and Energy Transition.
• 16 November: College of Commissioners meeting. On the agenda: Communication on Schengen enlargement.
• 18 November: General Affairs Council. On the agenda: European Council preparations, EU – UK relations, Respect for EU values in Hungary.

Karl Isaksson, Managing Partner Brussels, Kreab

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