Eurogroup renews its focus on structural reform coordination

07/07/2014 - News

Eurogroup discusses how to reduce the tax wedge on labour to make the euro area more competitive and deliver growth and jobs.

The Eurogroup renewed its focus on coordinating structural reforms to enhance the euro area's competitiveness. In the first of a series of discussions, ministers considered how to reduce the tax wedge on labour so as to facilitate job creation.
The tax wedge on labour is the difference between the cost of an employee's salary to an employer and that employee's take-home-pay.  Eleven euro area member states were encouraged to reduce this difference in their country-specific recommendations.
Spain, Italy and the Netherlands presented their national initiatives in this area.  Following a productive discussion, the Eurogroup concluded that while positive reforms are being undertaken, more work remains to be done.
The Eurogroup agreed that tax reductions should be financed through expenditure cuts or by measures that shift the tax burden to other revenue sources that are less detrimental to growth. The Eurogroup will return to the issue in September when it will consider common principles for implementing reforms in this area.

Banking union update

The Eurogroup welcomed the Chair of the Supervisory Board of the single supervisory mechanism (SSM) Danièle Nouy. She updated ministers on the progress made towards setting up the SSM.
The asset quality review of systemic financial institutions will be finalised in July. It will feed into the stress tests conducted by the European Banking Authority and the national supervisory authorities. The results will be published in October.
The ECB reiterated that capital shortfalls will need to be covered within 6 to 9 months after the release of stress test results. Eurogroup President Jeroen Dijsselbloem underlined that the first port of call to address capital shortfalls needs to be private sources.

€1 billion unlocked for Greece

Eurogroup welcomed Greece's achievement of a first set of outstanding milestones linked to the 4th programme review.  This will unlock a disbursement of €1 billion from the European Financial Stability Facility.
Eurogroup will next meet on 12 September 2014.


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