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Economic and Financial Affairs Council, 12 June 2026
Main results
As we conclude our presidency, I am proud to reflect on Cyprus’ contribution in the area of economic and financial affairs. Among other achievements, we secured the landmark €90 billion loan package for Ukraine, clinched a deal on modernising the EU customs framework, and made progress on the market integration and supervision package – a key deliverable for EU leaders. All these efforts delivered on our ultimate goal as presidency – a more autonomous Union, open to the world.
Makis Keravnos, Minister of Finance of the Republic of Cyprus
Carbon border adjustment mechanism
The Council agreed its position on strengthening the carbon border adjustment mechanism (CBAM), the EU’s tool to fight carbon leakage and promote global decarbonisation, ahead of negotiations with the European Parliament.
The new framework would extend the CBAM’s scope to new products and close loopholes that may be used to circumvent the system.
The EU remains committed to reducing climate emissions both within the Union and globally. Strengthening the CBAM and closing loopholes that can circumvent our rules is a key part in fulfilling that goal. The position agreed today is the first step in making the system more robust.
Makis Keravnos, Minister of Finance of the Republic of Cyprus
In operation since 1 January 2026, the CBAM puts a fair price on carbon emitted during production of imported goods in the most carbon-intensive sectors: iron and steel, cement, fertilisers, aluminium, electricity and hydrogen, and encourages cleaner industrial production in non-EU countries.
Among other improvements to the Commission’s original proposal to strengthen the CBAM, the Council has refined the list of new products to which the mechanism would be applied andmandates the Commission to conduct an annual review of downstream products that could be included in future. It also defines more precisely the process to be followed when deciding to exempt a particular good from the CBAM framework when faced with serious and unforeseen circumstances to the internal market.
Ministers exchanged views on the market integration and supervision package – a key element of the savings and investments union. Agreement on this package is among the objectives contained in the “One Europe, One Market” roadmap.
The draft legislation aims to deepen integration of EU capital markets by removing barriers to cross-border provision of investment activities and strengthening supervisory efficiency. This should help in turn to boost EU competitiveness through the mobilisation of private savings.
In particular, the draft rules encompass measures aimed at strengthening the role of the European securities and markets authority (ESMA), including by reinforcing its role in EU-level supervision in agreed areas – such as of significant central counterparties, central securities depositories, and trading venues - and reforming its governance.
During the discussion, many ministers supported ESMA’s supervision of significant cross-border market participants in the EU, stressing that such supervision should be targeted to entities with a genuinely cross-border and/or systemic importance.
A number of ministers underlined the need to define proportional, objective and transparent criteria for determining significance, that ensure equal treatment across entities, including for crypto asset service providers. At the same time, others called for further consideration of the proposed group criterion. Many ministers stressed the importance of avoiding increased administrative burdens and costs for businesses.
On governance, ministers debated the division of responsibilities between the proposed executive board for ESMA and the already existing board of supervisors. Under the Commission proposal, the new executive board would consist of five members and would focus on supervisory tasks. The already existing board of supervisors, consisting of a representative from each EU member state, would retain a broader strategic role and be able to object to some of the executive board’s most important decisions.
While some member states supported the Commission’s proposal for a strong role for the executive board to ensure robust and effective EU-level supervisory decision-making, many ministers stressed the need to preserve a meaningful role for national competent authorities and the board of supervisors, including through appropriate involvement in supervisory decision-making.
Ministers took two decisions under the stability and growth pact, the EU rules designed to ensure that EU member states pursue sound public finances and coordinate their fiscal policies.
First, the Council decided to close, or abrogate, the excessive deficit procedure (EDP) concerning Malta, which was first opened in 2024.
The decision to abrogate was warranted given that Malta’s general government deficit has been successfully and durably reduced to below 3% of GDP.
Second, the Council activated the national escape clause (NEC) under the stability and growth pact (SGP) for Spain. The measure will help Spain transition to higher defence spending at national level without putting its debt sustainability at risk.
The NEC allows a member state to temporarily deviate from budgetary requirements in response to exceptional circumstances outside their control, while ensuring debt sustainability.
17 other member states have previously had their requests to activate the national escape clause approved.
The Commission presented the 2026 European Semester Spring package adopted on 3 June.
The package contains country-specific recommendations (CSRs) for all member states regarding their economic, social, employment, structural and budgetary policies. The Council is expected to adopt these CSRs in July.
Ministers exchanged views on the state of play of the economic and financial impact of Russia’s aggression against Ukraine, based on an update from the Commission. This is a recurring item on the ECOFIN agenda.
The Council adopted implementing decisions approving targeted amendments submitted by Belgium, Poland, Portugal, Slovakia and Spainto their recovery and resilience plans.
The RRF is the EU’s large-scale financial support programme in response to the challenges the COVID-19 pandemic has posed to the European economy. It is the centrepiece of NextGenerationEU, a temporary recovery instrument that allows the Commission to raise funds to help repair the immediate economic and social damage caused by the pandemic.
To benefit from the facility, member states must submit recovery and resilience plans (RRPs) to the Commission, setting out the reforms and investments they intend to implement by the end of August 2026.
To date, around €426 billion has been disbursed from the RRF.
As an item without discussion, the Council approved the bi-annual ECOFIN report to the European Council on tax issues. The report provides an overview of the progress achieved in the Council during the term of the Cyprus presidency (January to June 2026), as well as an overview of the state of play of the most important items under negotiation in the area of taxation.
Ministers also adopted conclusions on the progress achieved by the EU’s code of conduct group on business taxation in the same timeframe.
