Documents considered by the Committee on 21 February 2018 Contents

6Economic and Monetary Union: reform

Committee’s assessment

Politically important

Committee’s decision

(a), (b), (d), (e), (f) and (g) Cleared from scrutiny; (c) Not cleared from scrutiny; further information requested

Document details

(a) Reflection Paper on the Deepening of the Economic and Monetary Union; (b) Communication from the Commission: Further Steps Towards Completing Europe’s Economic and Monetary Union—a Roadmap; (c) Proposal for a Council Regulation on the establishment of the European Monetary Fund; (d) Proposal for a Regulation amending Regulation (EU) 2017/825 to increase the financial envelope of the Structural Reform Support Programme and adapt its general objective; (e) Communication from the Commission: A European Minister Of Economy and Finance; (f) Proposal for a Council Directive laying down provisions for strengthening fiscal responsibility and the medium-term budgetary orientation in the Member States; (g) Communication from the Commission: new budgetary instruments for a stable Euro Area within the Union framework

Legal base

(a), (b), (e), (g):—; (c) Article 352 TFEU; special legislative procedure; unanimity; (d) Articles 175 and Article 197(2) TFEU; ordinary legislative procedure; QMV; (f) Article 126(14) TFEU; special legislative procedure; unanimity



Document Numbers

(a) (38795), 9940/17, COM(2017) 291; (b) (39353), 15653/17, COM(2017) 821; (c) (39348), 15664/17, COM(2017) 827; (d) (39349), 15663/17, COM(2017) 825; (e) (39351), 15655/17, COM(2017) 823; (f) (39350), 15660/17, COM(2017) 824; (g) (39352), 15654/17, COM(2017) 822

Summary and Committee’s conclusions

6.1The EU’s “Five Presidents Report” of June 2015 called for further steps to strengthen the institutional governance and economic resilience of the Eurozone. It included recommendations to improve the single currency area’s financial stability, fiscal prudence, economic convergence and institutional governance. Based on these objectives, the European Commission published a White Paper on “completing Europe’s Economic and Monetary Union”, accompanied by several concrete legislative proposals, in December 2017.50

6.2As we have set out in more detail in “Background” below, the most notable features of the Commission’s proposals are the transformation of the existing European Stability Mechanism for Eurozone countries in financial difficulty into a European Monetary Fund (EMF); the integration of the 2011 “Fiscal Compact” on budgetary stability into EU law; and a discussion on the possible creation of a “European Minister of Economy and Finance”. The Commission also announced that it will table further proposals in the coming months for Eurozone-specific budgetary instruments, including a stabilisation fund to address macro-economic shocks and a reform delivery tool to support structural reforms in Euro area countries. These will be part of the broader negotiations on the post-2020 Multiannual Financial Framework (MFF), which are due to begin this summer.

6.3The Commission’s EMU package is unlikely to face smooth sailing through the EU institutions, given the political sensitivity around Eurozone reform. It has already been reported that the Eurozone Governments in the Council want to ditch the EMF proposal, because it would grant new powers to the European Commission and give the European Parliament an oversight role. Instead, the Council is apparently exploring the possibility of creating the European Monetary Fund via a new intergovernmental agreement, by-passing the EU institutions altogether.51

6.4The Chief Secretary to the Treasury (Elizabeth Truss) submitted Explanatory Memoranda on the various documents published by the Commission in late January 2018. The Government will keep the various initiatives put forward by the Commission under review, although it is of the view that they will have very little direct impact on the UK as a non-Eurozone country and given its withdrawal from the EU. The Minister also adds that the forthcoming proposals on the next MFF are “not relevant to the UK” as the Government “is envisaged to play no part” in that long-term budget due to Brexit.

6.5The Commission’s proposals for the completion of the EU’s Economic and Monetary Union are far-reaching, but will only have a limited direct impact on the UK given its withdrawal from the EU and its opt-out from the single currency. We nonetheless consider them of political importance, given the UK’s interest in an economically cohesive and resilient Eurozone. The drive towards reducing risks to financial stability could also affect the terms under which the British financial services industry operate in the EU after the UK effectively leaves the Single Market,52 if it leads to a further regulatory reform affecting the banking sector and capital markets within the Eurozone.53

6.6Given that the proposals have no direct impact on the UK, we are content to clear all the Commission documents from scrutiny, with the exception of the proposed European Monetary Fund (whether it is established by EU Regulation or via an intergovernmental agreement). We would like to be kept informed of progress in the negotiations on the EMF, and how it would affect the functions of the International Monetary Fund in Eurozone countries. We also note that, even though it is an Article 352 proposal, the Commission has not included an impact assessment.

6.7However, we are concerned by the Minister’s characterisation of the upcoming proposals for Eurozone budgetary instruments under the post-2020 Multiannual Financial Framework as “not relevant to the UK”, because the Government “is envisaged to play no part” in that long-term budget. The Government and the European Commission have begun negotiations on a post-Brexit transitional period, during which the EU has stipulated that the UK should remain subject to the EU’s regulatory and budgetary instruments and structures.54

6.8Conversely, the Secretary of State for Exiting the EU has told Parliament that the Government is seeking a transitional arrangement lasting “between 21 and 27 months”.55 Should the transition lasts beyond December 2020, it would overlap with the entry into force of the next MFF in January 2021. If the EU’s “budgetary instruments” continue to apply to the UK during any part of the transition after December 2020, that would imply the UK would have to make contributions to the EU budget for expenditure plans over which it will have had no vote. We have written to the Chief Secretary to the Treasury separately about this matter.

Full details of the documents

(a) Reflection Paper on the Deepening of the Economic and Monetary Union: (38795), 9940/17, COM(2017) 291; (b) Communication from the Commission: Further Steps Towards Completing Europe’s Economic and Monetary Union—a Roadmap: (39353), 15653/17, COM(2017) 821; (c) Proposal for a Council Regulation on the establishment of the European Monetary Fund: (39348), 15664/17, COM(2017) 827; (d) Proposal for a Regulation amending Regulation (EU) 2017/825 to increase the financial envelope of the Structural Reform Support Programme and adapt its general objective: (39349), 15663/17, COM(2017) 825; (e) Communication from the Commission: A European Minister of Economy and Finance: (39351), 15655/17, COM(2017) 823; (f) Proposal for a Council Directive laying down provisions for strengthening fiscal responsibility and the medium-term budgetary orientation in the Member States: (39350), 15660/17, COM(2017) 824; (g) Communication from the Commission: new budgetary instruments for a stable Euro Area within the Union framework: (39352), 15654/17, COM(2017) 822.


6.9The institutional set-up of the euro centralised monetary policy within the European Central Bank and the Eurosystem,56 but left responsibility for economic and fiscal policies firmly in the hands of the Eurozone’s national governments. When the financial crisis erupted in 2008, this decentralised structure allowed financial and sovereign debt crisis in one Eurozone country to spread to others, while the EU lacked the necessary structures to mount a unified response.

6.10To stabilise the Eurozone economy, and to put in place the structures necessary to prevent a recurrence of the crisis, the EU has engaged in a far-reaching process of economic, legal and institutional reform. Initiatives to that end have included:

6.11In October 2014 the Finance Ministers of the Eurozone underlined the fact that “closer coordination of economic policies is essential to ensure the smooth functioning of the Economic and Monetary Union”.66 It called for work to continue to “develop concrete mechanisms for stronger economic policy coordination, convergence and solidarity” and “to prepare next steps on better economic governance in the euro area”.

The Five Presidents’ Report

6.12In response to the Eurogroup’s request, the EU institutions prepared the “Five Presidents’ Report” (FPR),67 published in June 2015. This identified four areas where further reform was needed to complete the Eurozone’s Economic and Monetary Union, and made concrete proposals to achieve these:

6.13In spring 2017, the European Commission presented a “reflection paper” on the EMU which took stock of progress made since the publication of the FPR in 2015, and the additional work needed to complete the EMU (document A).71 It noted that several short-term measures were being taken to meet the FPR’s recommendations, including a stronger focus on social issues within the European Semester and continued negotiations on Risk Reduction Measures in the banking sector.72

6.14In his September 2017 “State of the Union” speech, European Commission President Juncker announced that the Commission would be bringing forward further proposals to make the structural changes identified as necessary by the Five Presidents Report.73 In particular, he announced that preparations were underway for:

The Commission proposals for reform of the EMU

6.15On 6 December 2017 the Commission presented the package of initiatives announced by the Commission President three months earlier. The main objectives of the package are set out in a Communication on the “further steps towards completing the Economic and Monetary Union” (document B). It sets out a “roadmap” for the completion of the EMU by 2025, noting that progress is required in the four areas identified in the Five Presidents’ Report (Financial, Fiscal, Economic and Political Union).

Specific initiatives to reform the EMU

6.16Concretely, the Commission has published three specific legislative proposals and two detailed policy papers to put flesh on the bones of its vision for the completion of the EMU:

6.17We received Explanatory Memoranda from the Chief Secretary to the Treasury (Elizabeth Truss) on these documents in late January. We discuss the substance of the Commission initiatives in more detail below, along with the Minister’s assessment of their implications.

Establishing a European Monetary Fund

6.18The European Stability Mechanism (ESM) was set up in October 2012 at the height of the Eurozone’s sovereign debt crisis. It provides additional support to Eurozone countries in financial difficulties through a “toolkit” of measures, including conditional loans; bank recapitalisation; and purchasing Eurozone sovereign bonds. The ESM currently oversees conditional macro-financial loans to Cyprus, Greece, Portugal and Ireland (granted by the EMS’s predecessor, the European Financial Stability Facility or EFSF) and a loan to Spain for indirect bank recapitalisation.74

6.19The “pressure of events” of the debt crisis in 2012 led to an intergovernmental solution to establish the ESM by separate Treaty.75 The Mechanism’s highest decision-making body is the Board of Governors, composed of the Finance Ministers of the Eurozone. An assistance operation to a Member State can only be agreed by unanimity among Eurozone countries, except in emergency situations (when a qualified majority rule applies).76

6.20Even as the intergovernmental solution was pursued, the European Commission argued that the same result could also be achieved within the framework of the EU Treaties.77 The Commission has now tabled a proposed Regulation to bring the Mechanism within the framework of EU law, with the aim of improving its functioning in terms of “transparency, legal review and efficiency of the EU’s financial resources”, and increase its accountability to the European Parliament. The proposal is complemented by a draft Treaty for the Eurozone countries to agree on the transfer of funds from the European Stability Mechanism to the European Monetary Fund. The EMF’s budget would not be part of the general EU budget.

6.21However, the Commission wants to go beyond merely transferring the ESM’s legal framework from an intergovernmental agreement to secondary legislation under the EU Treaties. It wants to transform the Mechanism into a “European Monetary Fund”, which in addition to maintaining the support functions of the ESM would also:

6.22The initiative takes the form of a proposal for a Council Regulation, under Article 352 of the Treaty on the Functioning of the EU—the fall-back option if there is no specific legal basis for EU legislation elsewhere in the Treaties.85 As a result, the proposal is subject to a unanimity requirement in the Council (including non-Eurozone Member States), and a vote of consent in the European Parliament. To be validly adopted under Article 352, the proposal will have to be shown to be “necessary to obtain one of the objectives set out in the Treaties”. It has been reported that the proposal has not been well-received by Eurozone Governments, who are apparently pushing for changes to the ESM to be made by a new inter-governmental treaty rather than ceding any more powers to the European Commission.86

6.23In her Explanatory Memorandum,87 the Chief Secretary to the Treasury states that “the Government will monitor the EU negotiations on the European Monetary Fund, including any potential implications for its relationship with the International Monetary Fund”. The UK would not be liable for any part of the financing of the EMF, as its capital will be subscribed only by Eurozone Member States, with no contribution from, or liability for, the general EU budget.

6.24The Minister also notes that the Government may not vote in favour of or allow the adoption of an Article 352 measure without an Act of Parliament to that effect, subject to certain exceptions (which do not apply to the EMF proposal).88 However, if the proposal is voted on in the Council after the UK ceases to be a Member State, as the Commission envisages, the Government will of course no longer have a veto.

Fiscal discipline: integrating the Fiscal Compact into EU law

6.25The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG), including the Fiscal Compact, came into force in January 2013. It was agreed outside the framework of the EU Treaties after the UK vetoed a proposed Franco-German amendment89 to the Treaty on the Functioning of the European Union in December 2011. Article 16 of the resulting intergovernmental agreement, which was signed by all then-Member States except the UK and the Czech Republic, stipulated that its substance should be brought into EU law by 2018.90

6.26The Commission argues that many of the Treaty’s elements were already incorporated into EU law via the so-called “Two Pack” Regulations in 2013 (see paragraph 6.10 above). It has now made a formal legislative proposal to incorporate the substance of the TSCG into EU law. This includes in particular Title III, the so-called Fiscal Compact, which requires the signatory countries to apply a balanced budget rule, along with an automatic correction mechanism in case of significant deviation.91 The Commission argues that integrating the Fiscal Compact into Union law will “simplify the legal framework and allow for continuous and improved monitoring as part of the overall EU economic governance framework” under the European Semester.

6.27Its proposal takes the form of a Directive on Fiscal Discipline, based on Article 126(14) TFEU.92 The Directive, which must be agreed unanimously by all Member States,93 would apply automatically to Eurozone countries, with “opt-in” provisions for non-euro Member States. The Commission notes that some elements of the TSCG cannot be incorporated into EU law without a Treaty amendment, and as such have not been included in its proposal.94

6.28In her Explanatory Memorandum,95 the Minister underlines that the UK is “not a signatory to the TSCG”, but adds that “a strong and successful EU, as well as a resilient euro area remain in the UK’s interests” irrespective of Brexit.

Eurozone budgetary instruments

6.29The EU already provides financial support for the Eurozone, in terms of both structural economic reforms and to assist Member States with financial difficulties, through the Structural Reform Support Programme,96 the European Structural & Investment Funds,97 and the European Financial Stability Mechanism.98

6.30The Commission has now proposed to build on these measures, by creating several new budgetary instruments to support the cohesion and stability of the Eurozone, including a separate budget line within the general EU budget dedicated to addressing the specific economic and fiscal needs of the single currency area.99 Some of the proposed initiatives can be taken forward as part of the current Multiannual Financial Framework (MFF), which runs until the end of 2020. Others, which require legislative change, will be incorporated into the Commission’s proposals for the next MFF, which will be presented in May 2018 and take effect in January 2021.

6.31The Commission proposes to create four dedicated budgetary Eurozone functions:

6.32Under the existing legal framework, only the proposals related to structural support and reform, in particular for euro accession countries, can be accommodated relatively easily. To that end, the Commission proposed two Regulations in December 2017 to:

6.33The provisions for the fiscal backstop for the SRF is contained in the separate legislative proposal to transform the European Stability Mechanism into the European Monetary Fund (see paragraphs 6.18 to 6.24). The other proposals will follow in the context of the post-2020 Multiannual Financial Framework, for which the Commission will present detailed proposals in May 2018. This will also include a more comprehensive reform delivery tool and a convergence facility for euro accession countries, building on the pilot projects already proposed by the Commission (see above).

6.34The Chief Secretary to the Treasury submitted an Explanatory Memorandum on the Commission’s suggestions for Eurozone budgetary instruments on 29 January 2018.106 She notes that the Government supports the proposed changes to the SRSP, as participation by Member States would remain voluntary. With respect to the more far-reaching propositions, including the full reform delivery tool and the stabilisation tool, the Minister notes that there are no concrete proposals at this stage, and that they will be part of the “next MFF, post 2020, when the UK is envisaged to play no part, so are not relevant to the UK”.

A European Minister of Economy and Finance

6.35The European Commission also published a policy paper on the creation of a European Minister of Economy and Finance. This position, it says, would be “instrumental in strengthening the coherence, efficiency, transparency and democratic accountability of EU economic governance”.

6.36As a first step, the Commission proposes the merger of the office Vice-President of the European Commission in charge of the Economic and Monetary Union with that of the President of the Eurogroup (currently a Finance Minister of a Eurozone country), which it says “is already possible under the current EU Treaties”.107 It argues this could be done when the next European Commission is appointed by the Member States and the European Parliament in November 2019.

6.37As a second step, the Commission wants Eurozone countries to reflect on the “key functions” of this new position in addition to the existing responsibilities vis-à-vis the Commission and the Eurogroup. Its policy paper outlines some possibilities, including:

6.38Given that this proposed new position would primarily affect the political leadership of the Eurozone, the Chief Secretary has not commented in detail on this aspect of the EMU package. She notes that the role would become operational “after the UK’s exit from the European Union”.

Proposed timetable for the adoption of EMU reforms

6.39Given the far-reaching nature of some of the reforms proposed by the Commission, the timetable for adoption by the Eurozone Member States is long-term: the aim is to have all the different elements for the “completion” of the EMU in place by 2025.

6.40Before May 2019, when the next European Parliament elections will take place, the Commission hopes to secure Council adoption of it the pending proposals for:

6.41Ambitiously, by mid-2019 the Commission also wants to have brokered agreement with Eurozone countries and the European Parliament on the EMU-elements of its proposals for the next Multiannual Financial Framework, the details of which are due to be published in May 2018. These will include the support facilitate for euro accession states and the outline of the fiscal stabilisation function. However, it expects only a “common understanding” of the role of a European Minister for Economy and Finance among Eurozone states.

6.42We have retained the proposal for a European Monetary Fund under scrutiny, and will assess the detail of the proposed Eurozone budgetary instruments when the relevant proposals are tabled by the Commission later this year.

Previous Committee Reports


51 Politico, “Capitals’ power grab for eurozone enforcer“ (14 February 2018).

52 The UK is expected to stay within the Single Market until the end of 2020 under the transitional period sought by the Government. However, during this time it will have no political representation or voting rights over new EU legislation. The Committee is pursuing the far-reaching political and legal implications of this arrangement with the Government separately.

53 The Eurozone has already established specific mechanisms for the oversight, recovery and resolution of credit institutions in the single currency area as part of the Banking Union. Separate proposals on the prudential requirements for banks and investment firms remain under discussion.

54 European Council guidelines on Article 50 (15 December 2017).

55 Exiting the European Union Committee Oral evidence: The Progress of the UK’s Negotiati ons on EU Withdrawal, HC 372, Q743.

56 The Eurosystem consists of the ECB and the Central Banks of Eurozone countries.

57 See European Commission Memo 11–898 of 12 December 2011 for more information.

58 Formally known as the “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union”.

59 The Fiscal Stability Treaty was originally envisaged to be brought within the EU framework through a change to the EU Treaties. However, this was vetoed by then-Prime Minister David Cameron. See for more information the House of Lords EU Select Committee Report on the Euro area crisis (February 2012).

60 Non-Eurozone countries party to the Treaty can voluntarily opt-in to this requirement. Denmark, Romania and Bulgaria have done so. See for more information the European Commission’s 2017 review of the Fiscal Compact.

61 The Stability and Growth Pact (SGP) applies to all EU Member States, as per Articles 121 and 126 TFEU. It consists of set of rules designed to ensure that EU countries maintain sound public finances and coordinate their budgetary policies. The main requirements are that Member States must keep their public deficit below 3 per cent of GDP, and their public debt below 60 per cent.

62 The “Two-Pack” Regulations (Regulations 472/2013 and 473/2013) impose more frequent scrutiny on the budgetary plans of Eurozone countries under the SGP, and impose additional requirements on Eurozone countries who are in the Excessive Deficit Procedure. See the previous Committee’s Report of 12 February 2012 for more information.

63 The EFSF, with a volume of €440 billion, and the ESM, with a volume of €700 billion, were agreed between the Eurozone countries outside of the framework of the EU Treaties, because of legal concerns that they would violate the Treaties’ “no bail-out clause” (Article 125.1 TFEU) if established by secondary legislation. A much smaller facility, the European Financial Stability Mechanism, was established under EU law with a volume of €60 billion. It is backed by the EU budget, and provided financial assistance to Ireland and Portugal between 2011 and 2014, and to Greece in July 2015. It no longer provides new assistance, since the creation of the ESM.

64 The Banking Union centralises responsibility for oversight of the Eurozone’s largest banks to the European Central Bank, rather than being left to domestic regulators.

65 The state of play on the creation of the European Deposit Insurance Scheme is covered in a separate chapter in this Report.

66 Euro Area Summit, 24 October 2014.

67 The five presidents in question are those of the European Commission (Jean-Claude Juncker), the European Council (Donald Tusk), the Eurogroup (Jeroen Dijsselbloem), the European Central Bank (Mario Draghi), and the European Parliament (Martin Schulz).

68 The Banking Union centralises responsibility for oversight of the Eurozone’s largest banks to the European Central Bank, rather than being left to domestic regulators.

69 The Capital Markets Union integrates the EU’s 28 national capital markets, for example by having more centralised oversight of such markets at EU-level, introducing EU-wide prudential requirements for investment firms and considering ways of facilitating SMEs’ shares on public markets. Its primary purpose is to give EU businesses more diversified sources of non-bank finance. However, in the context of the EMU it also serves to strengthen cross-border risk-sharing through deepening integration of equity markets, which is a key economic shock absorber, and to provide a buffer against a liquidity crisis in the banking sector.

70 The EU’s social policy objectives for the coming years are set out in the “European Pillar of Social Rights”, adopted by the Commission, Parliament and the Council in November 2017. See for more information our Report of 29 November 2017.

71 See Commission document COM(2017) 291.

72 We have covered the state of play on the Risk Reduction Measures package in a separate chapter in this Report.

73 Jean-Claude Juncker, State of the Union Speech, September 2017.

76 Articles 4 and 5(6)(f) of the ESM Treaty.

77 See for example the Blueprint for a Deep and Genuine Economic and Monetary Union (28 November 2012). Nevertheless, the Member States agreed an amendment to Article 136 TFEU in 2011 which allowed the Eurozone countries to “establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole”. This was in response to a legal claim that the ESM would otherwise be incompatible with EU law.

78 Article 3 of the European Stability Mechanism Treaty.

79 See for more information the EU Law Analysis website, (accessed 6 February 2018).

80 The SRF is financed by contributions for the Eurozone’s banking sector.

81 The Commission says: “Such a backstop would instil confidence in the banking system by underpinning the credibility of actions taken by the Single Resolution Board. In turn, this would actually reduce the likelihood of a situation in which a backstop would need to be called on”. In addition, Member States also agreed that the backstop should be fiscally neutral over the medium term so that any potential deployment would be recovered from the banking sector in the euro area.

82 At present, there are no non-Eurozone countries in the Banking Union. However, Sweden and Denmark are considering joining.

83 This change is to ensure compliance with the Meroni case law of the European Court of Justice (cases C-9/56 and C-10/56), relating to the extent to which EU Institutions can delegate their tasks to regulatory

84 See article 3 of the Commission proposal.

85 The Commission notes that, historically, several significant decisions relating to the establishment of the Economic and Monetary Union have been based on the equivalent of Article 352 TFEU, i.e. in absence of a clear legal base in the Treaties. For instance, decisions on the European Monetary Cooperation Fund, the European Currency Unit and the first balance of payment mechanisms were taken under Article 235 of the Treaty on the European Economic Community, the predecessor to Article 352 TFEU.

86 Politico, “Capitals’ power grab for eurozone enforcer“ (14 February 2018).

87 Explanatory Memorandum submitted by HM Treasury (23 January 2018).

90 Technically, under the terms of the TSCG, the deadline for its incorporation into EU law was 1 January 2018. The European Parliament and the Commission insisted on its incorporation under EU law within a defined timeframe, which the Member States accepted.

91 Title III requires participating countries to have budgetary position in balance or in surplus, with a lower limit for the structural deficit of 0.5% of GDP, which can become 1.0% of GDP for Member States with a debt level significantly below 60% of GDP and with low risks for the long-term sustainability of public finances. They must also legislate for a correction mechanism automatically triggered in case of significant deviation.

92 See Article 126 TFEU for more information.

93 The European Parliament will be consulted, but will not have a vote.

94 In its proposal, the Commission says: “Other provisions of the TSCG have either been already integrated into EU law (in particular via the ‘Two-pack’, for the euro area), or would require changes to the Treaties, or do not lend themselves to incorporation for various reasons (e.g. some replicate existing EU law)”.

95 Explanatory Memorandum submitted by HM Treasury (23 January 2018).

96 The Structural Reform Support Programme is intended to help EU countries to design and implement institutional, administrative and structural reforms, and to use EU funds that are available for such purposes more efficiently and effectively. The SRSP is complementary to existing EU programmes and resources available for capacity-building and technical assistance. Its added value is the provision of assistance, advice and expertise on the ground, i.e. to the national authorities of the requesting member states. See Regulation 2017/825.

97 The ESIFs include the European regional development fund (ERDF); the European social fund (ESF); the Cohesion fund (CF); the European agricultural fund for rural development (EAFRD); and the European maritime and fisheries fund (EMFF)

98 See the section on the proposed European Monetary Fund for more information on the EFSM.

99 For more information on the general EU budget for 2018, see our Reports of [date] and [date].

100 In its reflection paper on the EMU, the Commission suggests that an Investment Protection Scheme could safeguard domestic investment in “well-identified priorities and already planned projects or activities at national level, such as infrastructure or skills development”.

101 According to the Commission, a Eurozone Unemployment Scheme would act as a “reinsurance fund” for national unemployment schemes, ensuring that increased uptake of unemployment benefit during an economic downturn would not lead to an excessively high fiscal deficit.

102 All EU Member States except the UK and Denmark are under a legal obligation to join the euro when they meet the relevant convergence criteria.

103 The Single Resolution Fund is open to non-Eurozone EU Member States, but none have so far joined. Sweden and Denmark are currently considering participating.

104 The reform delivery tool pilot would allow Member States to use some of their European Structural and Investment funds (ESIFs) performance reserve (a maximum of 6% of their respective ESIF allocation) to support structural reforms, such as changes to tax and public administration systems. The proposal is budget-neutral as funding would be allocated by Member States from their existing 2014–20 ESIFs. The Committee cleared this proposal from scrutiny separately.

105 The budgetary increase for the SRSP is to be funded from the Flexibility Instrument, i.e. it will not be funded by cuts to the EU budget elsewhere.

106 Explanatory Memorandum submitted by HM Treasury (29 January 2018).

107 It would require the Eurogroup to change its working methods, for example by agreeing to elect the relevant Vice-President of the Commission as its President.

108 In October 2015, the European Commission proposed measures to establish a “unified representation of the euro area” in the IMF. That proposal has not been adopted by the Council.

23 February 2018