At the Council of EU economy and finance ministers (ECOFIN Council) of November, 4th, chaired by the French Minister for the Economy, Industry and Employment, Christine Lagarde, the ministers focused their discussions on the pursuit of efforts to respond to the financial crisis, citing the coordination of national action to support the financial sector, the granting of assistance to EU countries affected by the crisis and the common messages that the EU should present at the debate on overhauling the international financial system.

In view of the latest developments on the financial markets and the initiatives taken by Heads of State and Government, notably at the European Council of October 15th and 16th, the discussions at the Economic and Financial Affairs (ECOFIN) Council were mainly focused on the financial crisis and the reform of the international financial architecture. The ministers also analysed the current economic and financial situation and examined the impact of the financial crisis on the real economy.

The first response, regarding monetary policy, will benefit from a more favourable structure since the strong drop in inflation. The ministers also emphasised the role of budgetary policy to mitigate the slowdown through the use of automatic stabilisers in line with the Stability and Growth Pact.

Besides, Ms Lagarde asked the European Investment Bank to submit proposals for boosting European growth at the next ECOFIN Council on December, 2nd. In addition to ongoing actions, the EIB should support the European economy and develop targeted sectoral actions, in particular for the automobile sector.

Ministers decided to grant financial aid of 6.5 billion euros to Hungary in addition to the aid from the International Monetary Fund (IMF). They agreed on the principle of raising the current ceiling of Community financial aid from 12 to 25 billion euros.

Within this ECOFIN Council, Ministers also had the opportunity to debate the common messages to send to the European Heads of State and Government who are meeting on November 7th to discuss the overhaul of the international financial system ahead of the international summit in Washington on November 15th, agreeing on the following principles:

• Placing the principles of responsibility and transparency at the heart of the system
• Ensuring appropriate regulation and monitoring
• Giving the IMF a primary role in ensuring the stability of the international financial system
• Involving emerging and developing countries in this process

Lastly, the ministers also continued their discussions on fiscal matters with a first debate on the compromise proposed by the Presidency regarding the application of reduced rates of VAT. They reached a political agreement on the creation of a system of exchanging information to combat VAT fraud in intra-community operations. Negotiations on an anti-fraud agreement with Liechtenstein were also discussed.