Landing a deal on a controversial overhaul of Europe’s capital market rules will require all countries “giving a bit” in negotiations, Tánaiste and Minister for Finance Simon Harris has said.
For the past decade finance ministers have been debating internal EU reforms that would make it easier for investment funding to move around the 27-state bloc, without being able to agree to changes.
Creating a more joined-up market for capital would require syncing national laws and systems, in areas such as insolvency and dividend tax, and giving more supervisory powers to a European-level regulator.
Ireland and Luxembourg have traditionally resisted any shift towards a single, powerful EU supervisory authority.
The two countries fear the position of Dublin and Luxembourg city as financial hubs would be threatened by companies and funds relocating to Paris, where the existing European Securities and Markets Authority (ESMA) is based, in the event it assumed more and more decision-making power.
Recent months have seen fresh momentum to settle the question about EU-level supervision of the fund- and asset-management sector.
Harris, who will chair meetings of EU finance ministers for the next six months, hopes to land an agreement by early October, for what would be one of the big achievements of Ireland’s EU presidency. “If only one person moves, there’s not going to be a deal,” he said.
A coalition of the EU’s six biggest economies – Germany, France, Italy, Spain, Poland and the Netherlands, known as the E6 – threw their weight behind plans to shift some powers from central banks and national authorities to the European regulator.
Supervision was only one element of a broader package of proposed changes, Harris said.
For too long the debate had been dominated by “circular” conversations between finance ministers about which EU states might gain more from changes, he said.
“It’s not about one member state benefiting or the other, the entire European Union is losing, because investment is leaving our union at a time when we need more,” the Tánaiste said.
Harris, who will chair his first Ecofin meeting of EU finance ministers next Friday, said he would be looking for a clear mandate from the room, for everyone to direct their officials to go away to work on the technical details, to tee-up a possible compromise agreement later this year.
The long-stalled reforms could make it easier for European companies to raise money and expand, without having to look to the US for investment funding.
“I’m cautiously optimistic that we can do this,” Harris said, noting that Ireland would be required to act as an honest broker steering the discussions, for the six months it held the EU presidency, playing a deal-making role in the Brussels system.
An agreement on the supervision element of the proposed changes was possible, he said.
“I don’t think any member states should approach this conversation from a position of fear or national loss. I think that entirely misses the point, we should approach this from a position of how do we grow the European economy?,” he said.
The changes would not require the unanimous support of all 27 national governments, only a weighted majority, which means 15 countries accounting for at least 65 per cent of the EU population.
In any final compromise deal there would have to be a level of “proportionality and balance” in the changes, the Fine Gael leader told reporters on Thursday. “It’s going to require everyone giving a bit,” he said.