Brian Cowen (Laois-Offaly, Fianna Fail)

I attended the meeting of the European Council in Brussels on 17 June. The meeting was unusual in that it took place on one day rather than the usual two-day format for our annual June meeting. That aside, however, in terms of its business the meeting was in many ways the first relatively normal meeting of the European Council this year. While we are still in the midst of ongoing economic and financial challenges, this meeting did not take place in an atmosphere of crisis, as was the case with other recent meetings. We had a busy agenda for our meeting, but I am pleased to say that we got through it well. Much of our discussion was taken up with economic issues, ranging from the Europe 2020 strategy for jobs and growth to enhancing economic governance and to regulating financial markets. I will concentrate on these issues in my initial remarks.

The European Council endorsed the Europe 2020 strategy for jobs and for smart, sustainable and inclusive growth. This strategy is intended to help Europe to recover from the economic crisis and to emerge stronger by boosting competitiveness, productivity, growth potential, social cohesion and economic convergence. In particular, we formally signed off on the five headline targets to underpin the strategy. The first of these targets, on employment, aims to raise to 75% the employment rate for women and men aged 20-64, including through the greater participation of young people, older workers and low-skilled workers and the better integration of legal migrants. The second target seeks to improve the conditions for research and development, in particular by raising combined public and private investment levels in this sector across the European Union to 3% of GDP. We have also agreed that we need a parallel indicator to measure research and development and innovation intensity and output.

Our third target reaffirms our commitment to reduce greenhouse gas emissions by 20% compared to 1990 levels; to increase the share of renewables in final energy consumption to 20%; and to move towards a 20% increase in energy efficiency. In this context, the European Union remains committed to taking a decision to move to a 30% reduction in emissions by 2020 compared to 1990, provided that other developed countries commit themselves to comparable emission reductions and that developing countries contribute adequately according to their responsibilities and respective capabilities. In other words, we need to work together in a co-ordinated fashion to safeguard the environment while recognising the economic and competitive challenges that we all face, as well as the need for fair and balanced burden sharing.

Fourth, we are committed to improving education levels across Europe, in particular by aiming to reduce school drop-out rates to less than 10% and by increasing the share of 30-34 years old having completed tertiary or equivalent education to at least 40%. Finally, our fifth EU-wide target is in the area of promoting social inclusion, in particular through the reduction of poverty, where we aim to lift at least 20 million people out of the risk of poverty and exclusion.

A further element of the Europe 2020 strategy will be the integrated guidelines for economic and employment policies, which were endorsed by the European Council and will now be formally adopted following an opinion of the European Parliament. These guidelines are intended to inform implementation of the strategy by the member states and, in due course, can serve as the basis for country-specific recommendations that the Council may address to member states, in line with relevant treaty provisions.

I am particularly pleased that, in our conclusions on the Europe 2020 strategy, we have agreed that all common policies, including the common agricultural policy and cohesion policy, will need to support the strategy, and that a sustainable, productive and competitive agriculture sector will make an important contribution. Deputies will recall that when I reported to the House on the March European Council, I mentioned that I had been very concerned about the absence of any meaningful reference to agriculture in the initial documentation on the strategy. The language agreed at our June meeting now reaffirms that the important contribution that agriculture makes to our economy, and in terms of employment, not just in Ireland but across the European Union, is increasingly being recognised.

The next phase of the Europe 2020 strategy will be the setting of national targets by member states in pursuit of the EU-wide targets which we have now agreed, the identification of the main bottlenecks to growth, and the preparation of national reform programmes to implement the strategy. This work will be advanced over the coming months, with the Commission now proposing that the national reform programmes be submitted at the same time as stability and convergence programmes in the spring. In parallel, the Commission will flesh out the various flagship initiatives envisaged within the Europe 2020 strategy for action at Community level, having already presented the first of these - a digital agenda for Europe.

Implementation of the Europe 2020 strategy is intrinsically linked to the issue of economic governance. In this regard, the President of the European Council, Herman Van Rompuy gave a progress report on the work being done by the task force to examine crisis resolution mechanisms and better budgetary discipline across the Union, which we agreed to establish at our March meeting. The President chairs this task force, on which Ireland is represented by the Minister for Finance, Deputy Brian Lenihan. In light of the report on progress so far, the European Council agreed several orientations for the future work of the group. These orientations cover strengthening the Stability and Growth Pact; paying greater attention to debt levels and overall sustainability in the context of budgetary surveillance; the annual submission of broad budgetary frameworks for consideration each spring under the so-called European semester, while taking full account of national budgetary procedures; ensuring member states' national budgetary rules and frameworks are in line with the requirements of the Stability and Growth Pact; and ensuring the quality of statistical data.

The process also needs to focus on macroeconomic imbalances as well as fiscal ones. The divergence in competitiveness positions within the euro area is one of the reasons for the financial instability we have recently witnessed. The European Council agreed on the merit of a scoreboard system to detect macroeconomic imbalances in future. This would form part of an early warning mechanism to help prevent their re-emergence. These are important principles that should guide the work of the task force in the coming months. We will consider the final report and recommendations of the task force at the October meeting of the Council.

It is important to stress that greater budgetary discipline across the Union is in all our interests. Some have sought to suggest that this implies a loss of sovereignty, but I do not accept this. Rather, it is a necessary sharing of responsibility. The work being done in this area clearly acknowledges the role and importance of national Governments, national parliaments and national budgetary processes. None of that need be at odds with the need for greater collective co-ordination of effort or greater cross-surveillance of decisions and actions.

The European Council also took several important decisions concerning the regulation of the financial services sector. In particular, we have called for the necessary legislative measures to be finalised so that the European Systemic Risk Board and the three new European supervisory authorities can begin working from the start of 2011. We have also pressed for rapid agreement on the legislative proposal on alternative investment fund managers and swift examination of the Commission's proposals on supervision of credit rating agencies.

During our meeting we also agreed that the results of ongoing stress tests of banks by banking supervisors would be published in July, in the context of demonstrating transparency and resilience in the banking sector. We agreed that member states should introduce systems of levies and taxes on financial institutions, both to ensure fair burden-sharing and to set incentives that will help contain systemic risk in the financial sector, as part of an overall credible resolution framework. Work to move this matter forward will need to address the issue of a level playing field, as well as assessing the cumulative impacts of various regulatory measures in the sector, while recognising that specific circumstances differ from one member state to another. I expect we will also return to this matter at our October meeting.

Consideration of regulation of the financial sector led us neatly to preparation of the Union's position for the G20 summit which took place in Toronto a week later. In this regard, we agreed that we would continue to press for a global approach to the introduction of systems of levies and taxes on financial institutions as part of an overall reform of the financial system. We also agreed on the need for a co-ordinated but differentiated approach to an orderly exit from the extra fiscal stimulus that many governments had introduced in response to the economic crisis. Finally, we agreed we would press for a review of IMF quotas as part of a broader review of IMF governance issues.

Following the G20 summit, a joint statement by the President of the European Council, Mr. Van Rompuy, and President of the Commission, Mr. Barroso, said that G20 leaders demonstrated clear common resolve to create strong, sustainable and balanced global growth and that there had been convergence around the Union's approach, combining growth friendly fiscal consolidation and following through on fiscal stimulus, tailored to national circumstances, with the G20 members agreeing concrete minimum targets for deficit reduction and the stabilisation and reduction of debt. While, as widely anticipated, the G20 did not reach agreement on the issue of bank levies, it nonetheless remains determined to keep up the pace for making the financial sector more resilient to crises and risk.

Returning to our discussions at the June meeting of the European Council, we reaffirmed our commitment to the UN millennium development goals ahead of the UN summit on this issue in September. We also agreed that we would review progress between now and 2015 on an annual basis at the level of Heads of State and Government. The Minister of State, Deputy Roche, might elaborate on this item in his contribution.

On climate change, we took note of the European Commission's latest communication which concluded that conditions do not currently exist to justify a step-up to a 30% target for emission reductions and that further analysis should be carried out. We agreed to return to this topic in the autumn, ahead of the next major climate change conference in Cancun, Mexico in December. We discussed a number of other issues in less detail.

We also endorsed conclusions from the Council of Ministers regarding implementation of the European pact on immigration and asylum. We agreed that accession negotiations with Iceland should be opened following the Commission's opinion on Iceland's application for membership of the Union. We noted that Estonia fulfils the treaty convergence criteria for membership of the euro and welcomed the Commission's proposal that Estonia adopt the euro on 1 January 2011, becoming the 17th member of the eurozone. Finally, we adopted a declaration on Iran outlining our concerns about that country's nuclear programme. I expect the Minister of State will say more about this issue.

I said at the outset that this was, in some respects, the first normal meeting of the European Council for some time. There is no doubt that the current international financial and economic situation remains uncertain and the markets volatile, but we cannot allow ourselves to be in thrall to the markets or slaves to that volatility. Going into the June European Council, I was strongly of the view that we must send out a clear, positive message showing the member states moving forward, collectively and individually, in a measured, responsible and effective manner. Such an approach is not only appropriate and necessary in its own right, it is also the most appropriate response to the markets.

We must continue our efforts to bring our public finances back into balance, which is essential to safeguarding a return to sustainable economic growth. We need to work more closely together, recognising our mutuality of interest, in overseeing our broad budgetary parameters and approach. We must show that in Europe, and especially within the eurozone, we will work together, decisively and effectively, to protect our currency. We need to reform our financial institutions, both to ensure that they contribute to the costs of recovery and to ensure we do not allow a repeat of the financial crisis. Above all, we must show we are in control, that we are prepared to act and that we will take effective action. I am satisfied that my concerns going into the meeting were shared by my colleagues around the table and that the actions, decisions and conclusions of that meeting show we are prepared to act, collectively and effectively, in our common interest.

I take this, my first opportunity, to wish my colleague, Deputy Barrett, well in his new role as Fine Gael spokesperson on foreign affairs.

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