17 Convergence and the single currency
| (a)
(27515)
9519/06
—
(b)
(27521)
9664/06
+ ADD 1
COM(06) 223
(c)
(27522)
9665/06
+ ADD 1
COM(06) 224
(d)
27523
9666/06
COM(06) 225
|
European Central Bank's Convergence Report, May 2006
Commission Report: Convergence Report 2006 on Lithuania
Commission Report: Convergence Report 2006 on Slovenia
Draft Council Decision in accordance with Article 122(2) of the Treaty on the adoption by Slovenia of the single currency on 1 January 2007
|
| Legal base | Articles 121(1) and 122(2) EC; consultation; QMV
|
| Documents originated | (a) —
(b)-(d) 16 May 2006
|
| Deposited in Parliament | (a)-(d) 24 May 2006
|
| Department | HM Treasury |
| Basis of consideration | EM of 8 June 2006
|
| Previous Committee Report | None
|
| To be discussed in Council | 11 July 2006
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
17.1 The Member States which acceded to the Community in 2004
are only prospective members of the Eurozone and as such are known
as "Member States with a derogation". Every two years,
or at the request of such a Member State, the Commission and the
European Central Bank are required to prepare "convergence
reports" assessing the readiness of the Member State concerned
to adopt the single currency. The convergence reports examine
both whether there is a high degree of sustainable economic convergence
in terms of Treaty defined price stability, fiscal, exchange rate
stability and long-term interest rate criteria and whether national
legislation is compatible with the Treaty.
The documents
17.2 Document (a) is a convergence report made on Lithuania and
Slovenia, at their requests, by the European Central Bank. Document
(b) is a Commission convergence report on Lithuania and document
(c) is one on Slovenia. Both reports on Lithuania find that it
has met the requirements of alignment of national legislation
and all the economic criteria, except those about price stability.
Although Lithuania had only marginally missed the target, recent
inflation trends and forecasts indicate that convergence will
not be sustainable in the long-term.
17.3 Both reports on Slovenia find that it has met the requirements
of alignment of national legislation and all the economic criteria.
On this basis the Commission propose in document (d) a Decision
abrogating Slovenia's derogation, so allowing it to adopt the
euro from 1 January 2007.
The Government's view
17.4 The Economic Secretary to the Treasury (Ed Balls) makes no
comment on the convergence reports and says the draft Decision
on Slovenia has no policy implications for the UK.
Conclusion
17.5 Although these documents are not directly relevant to
the UK they indicate a further development of the Eurozone and
so, whilst clearing them, we draw them to the attention of the
House.
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