EU-UK relations go through a revamped dialogue based on a “common goal”

The last Eurogroup meeting marked the first appearance of a UK Minister in a euro area ministerial level meeting since the United Kingdom’s exit from the EU. Since the new Labour-led government of Keir Starmer took office last July, a revived dialogue with the other side of the Channel has been unfolding. Both sides are now paving the way for negotiating a new framework for commercial relationships.

UK Chancellor of the Exchequer Rachel Reeves spoke out on the will to engage in the “reset that the prime minister wants to have with the EU.” “I did not come here to start negotiations; I came today to rebuild trust and to show that we want to rebuild our relationship,” Reeves said during a press conference on the sidelines of the meeting, which has taken place in an inclusive format with the presence of non-Euro States.

The British minister recalled the red lines set by the government on joining the single market, the customs union, and adopting the same rules on a borderless labor market. “Those red lines remain, but subject to that, we want to build closer trade relationships, more defense cooperation on security with our neighbors and trading partners in the European Union,” Reeves said, claiming that this action for the United Kingdom to be aligned with its collective national interest.

According to Reeves, the Brexit deal made by the previous government “was not the best one for our country.” She referred to reduced trade flows, “not only from the UK to the EU but also from EU-based companies to the UK.” She further stressed, “There is a common goal, and a common challenge to improve those trade flows, to improve those investment flows in the interests of citizens, not only in the UK but also in the EU countries.”

“First, it is important to adjust the tone,” Eurogroup president Paschal Donohoe said during the press conference.

‘It is clear that there is a strong willingness of the UK to engage constructively with the EU, and it is the same on our side”, the European Commissioner for Economy Valdis Dombrovskis told journalists had not yet started. And he remained firm to say that “first and foremost, it is important to properly implement the agreements we have, the Trade and Cooperation Agreement and the Windsor Agreement.”

French politics wreaks havoc

France was a special observed case because of the negative impact that a much-feared political stalemate could have on financial markets after the fall of the government led by Michel Barnier. The watchword is to avoid scaremongering. The provisional budget year is considered a drama. The new German Federal Minister responsible for Finance, Jorg Kukies, showed confidence in the stable conditions in which government securities are exchanged in the markets.

“The situation in France is challenging,” Eurogroup President Paschal Donohoe said. We are confident that the French political leaders will act to stabilize the situation and that they will take the necessary measures to provide stability,” he further stressed.

In a first analysis of the national draft budgetary plans, ministers considered the restraint in net current expenditure “appropriate”. “This is appropriate at the current juncture, in view of the high levels of deficit and debt in the euro area and the need to support the ongoing disinflationary process,” the ministers highlighted in a joint statement.

New rules on double taxation and Vat exemption

The day after, all EU Finance ministers held a first exchange on the medium-term fiscal-structural plans of 21 Member States, with the goal of adopting the related recommendations in January.

The Council also unanimously voted on the FASTER directive, which will now be published in the EU’s Official Journal and enter into force, setting up safer and faster procedures to obtain double taxation relief. The directive will introduce a common EU digital tax residence certificate (eTRC) that tax-paying investors would be able to use to benefit from the fast-track procedures to obtain relief from withholding taxes. Member states will provide an automated process to issue digital tax residence certificates (eTRC).

A political agreement was also reached on a new directive dealing with tax certificates for VAT exemptions. It introduces a new electronic certificate to replace the existing paper certificate used when goods are to be exempt from VAT. Member States limited the scope of the mandatory use of the electronic VAT exemption certificate that the Member States are required to issue.