On Tuesday, Spain and Portugal will once again present their accounts to the EU’s Council of Economics and Finance Ministers (ECOFIN), at which those countries which do not use the euro will also take part and which will be chaired by the Second Vice-President of the Spanish Government, Elena Salgado.

On Sunday 9 May, before the start of the extraordinary ECOFIN meeting in Brussels, Ms Salgado announced an additional saving of 15 billion euros between 2010 and 2011; she did not give details of the measures, waiting for the President of the Government to do so before the Spanish Parliament.

During the ECOFIN debate, various delegations – Germany, Holland and Sweden among them – insisted on bigger cuts, of up to 30 billion euros, to make the eurozone’s historic financial stabilisation plan, approved by the twenty-seven Member States, credible.

In exchange for a rescue mechanism of up to 750 billion euros for those eurozone countries, such as Greece, which could run the risk of insolvency, the Member States and the European institutions, especially the European Central Bank, required those countries most exposed to drastically and rapidly reduce their deficits.

Measures
With the new adjustment, Spain aims to cut the budget deficit from 11.2% of GDP to 9.3% in 2010, reduce it to 6% in 2011 and bring it under the limit of 3%, set by the Stability and Growth Pact, in 2013.

To achieve this, on Wednesday, the President of the Spanish Government, José Luis Rodríguez Zapatero, set out a number of measures in Parliament, including reducing public investment, freezing pensions, scrapping the ‘baby cheque’ payment for newborn children and reducing public-sector pay by an average of 5%.

That same day, the Commissioner for Economic and Monetary Affairs, Olli Rehn, welcomed the announcement of the measures, saying that they seemed to be heading in the right direction, but declined to comment definitively before knowing all of the details.

The International Monetary Fund also welcomed the announcement through the Director of its European Department, Marek Belka, though he also suggested that it was too soon to say if additional cuts will be necessary.

Portugal, for its part, approved an extensive reduction in public spending on Thursday, cutting the salaries of senior officials by 5% and increasing VAT from 20% to 21% to save 2.1 billion euros and reduce the budget deficit to 7% of GDP this year, below the 8.3% initially forecast by the Portuguese Government.

Alternative Investment Funds
On Tuesday, ECOFIN plans to vote on the Directive on Alternative Investment Fund Managers (AIFMs), which has been a source of disagreement between the United Kingdom and its main European partners.

The directive would introduce harmonised rules for supervising managers of alternative investment funds, which include hedge funds, private equity funds, and also property funds, commodity funds, infrastructure funds and other types of institutional funds.

Among the regulations which the United Kingdom most objects to are obliging managers to regularly disclose their risk profile and using European banks as depositories, as well as limiting the extent to which they can use debts as leverage.

Funds based outside Europe but run by European managers will have to meet similar obligations in order to be aimed at European investors.

It will be possible for funds managed by non-Europeans to be marketed in Europe, but on the condition that there are ‘appropriate cooperation agreements’ between the respective competent authorities, which has given rise to unease in the United States.

Also with the aim of minimising risk in the financial system, the Internal Market Commissioner , Michel Barnier, will inform ECOFIN of the progress made with implementing a regulation which avoids the cost of future crises falling on the taxpayer.