The ministers of economy and finance of the EU (Ecofin) reached a draft agreement on Tuesday at a meeting chaired by the Spanish Minister of the Economy and Finance, Elena Salgado, on the directive aimed at strengthening control over investment fund managers, especially the most speculative ones (hedge funds).

The Second Vice President of the Spanish Government expressed her pleasure with the agreement reached, which grants a mandate to the rotating Spanish Presidency to start negotiations with the Parliament on the directive (framework law), with the aim of this being voted on and approved by the Parliament in July.

"This directive fulfils the commitments that the EU took on within the G20, and it also fulfis the Council's plans to regulate all market participants that could present a risk to financial stability", Salgado told her partners during a televised discussion.

The members of the Council authorised the Spanish Presidency to start talks with the European Parliament on the fundamentals of this commitment while "bearing in mind the concerns expressed by the member states".

Spain and Portugal presented a series of additional fiscal consolidation measures to the Economic and Financial Affairs Council (Ecofin) that "are on the right track", according to the Commissioner for Economic and Monetary Affairs, Olli Rehn, speaking at the end of the meeting on Tuesday in Brussels.

Commissioner Rehn joined Spain's Minister of Economy and Finance, Elena Salgado, who had chaired the Ecofin meeting, at the final press conference, and said he hoped to soon have a "full evaluation" of the additional measures presented by Spain and Portugal.      

However, Rehn stressed that the EU executive body must now proceed with a "quantitative and qualitative" evaluation of the package of measures, and announced that he would present his findings to European ministers during the next Eurogroup and Ecofin meetings, scheduled to be held in Luxembourg on 7 and 8 June.
 
The commissioner explained that both plans respond to the "Consolidation Pact" that the EU-27 agreed 10 days ago as a condition for putting in place a €750 billion rescue mechanism.

He said the Commission is preparing several reports on a range of countries in relation to their excessive debt, and said that some countries must speed up their fiscal consolidation while others have greater room for manoeuvre.

Meanwhile, the Second Vice-President of the Spanish Government, Elena Salgado, confirmed that Spain had presented its additional measures and, in response to questions from the media, added that she would be downwardly revising Spain's 2011 economic growth forecast by a few tenths of a percentage point as a result of the latest adjustment measures announced.
 
When asked about the impact of these measures, Salgado said that "lower public spending can have an effect on growth", although she clarified this by saying that "below forecast growth does not mean negative growth". 
 
"We are going to downwardly revise our growth forecast for 2011, which was 1.8%", said the Spanish minister, adding that there were no plans to review the forecast for 2010.
 
On the subject of a possible tax hike, Salgado reiterated that both she and the President of the Spanish Government, José Luis Rodríguez Zapatero, have repeated on several occasions that the adjustment will come in the form of public expenditure cuts.
 
"That is what we have announced and that is what we have presented. Of course we are not ruling out anything, but at this time there is no proposal, nor even a specific study" on raising taxes, Salgado stressed.

When asked about preventive budgetary monitoring, Commissioner Rehn said there was no suggestion of getting involved in the budgetary allocations of EU Member States, but that the Eurogroup was instead interested in being able to make recommendations and for the countries in question to take the relevant corrective measures.

On this issue, Elena Salgado said there was “no intention on the part of the Commission to override the sovereignty of national parliaments”.

The EU-27 also agreed an extension until December of the system of guarantees put in place during the crisis in order to protect the financial sector, although they decided to toughen the conditions for accessing these guarantees and to increase commissions from July onwards.
 
The Council felt that "it is timely to move towards an appropriate increase in the commissions charged for the guarantees, with the aim of adjusting the cost of financing more closely to market conditions" and avoiding distortions in competition, in line with the conclusions adopted on Tuesday in Brussels.

• Video: Highlights of the press conference following the Economic and Financial Affairs Council