That's it from us!

Another summit done and dusted. The next regular meeting is planned for 20 October but there'll be plenty of geopolitical action to get you by in the coming weeks.

As a reminder, G7 leaders meet from 26 June to 28 June. This will be immediately followed by a blockbuster NATO summit in Madrid from 28 Jun to 30 June. 

Macron dismisses concerns over his loss of absolute parliamentary majority

The French President affirmed that the fact he lost his absolute parliamentary majority and will have to rely on lawmakers from other political formations to further his domestic agenda is "terribly banal at the European level."

"It's about building understanding to convince everyone" and "get constructive majorities," he said.

"That's what we will do", he continued, "either through coalition or agreements on texts to move forward on a clear agenda".

"It gives us more work to do because we have to reconcile convergence in our countries and the ability to build compromises," he went on, assuring that "France knows how to compromise, including yours truly".

He also dismissed that although France is now in a similar position to Germany and Italy, where coalitions are already in place, could weaken leadership in Westen Europe. He said instead that this "reflects the democratic vitality of our countries".

Macron vows to 'do everything' to lift Hungarian veto on global corporate tax

A major file the French presidency was not able to conclude yet has been the global corporate tax which is being blocked by Hungary. 

The tax reform is part of a global deal achieved last year at the Organisation for Economic Co-operation and Development (OECD). It has been endorsed by 136 countries representing more than 90% of global GDP.

Hungary had agreed with the plan but is now arguing such a tax would be damaging as the world grapples with the economic impacts of the war in Ukraine.  

But others suggest the Hungarian veto may be in the hope of securing further concessions from the European Union, which has yet to approve the country's recovery plan over concerns related to corruption, cronyism and fraud. A similar tactic was seemingly, successfully, deployed by Poland. 

"We will do everything both Europeans and non-Europeans involved in these efforts", Macron said, "to deblock this Hungarian veto."

"We will do our utmost," he emphasised. 

EU 'very different' from six months ago: Macron

Macron also defended his EU presidency and said "very humbly that the Europe of June 2022 is very difefrent from the one of January 2022".

He thanked the three European institutions, which he said, acted in unison during these past six months to advance the French agenda while at the same time deal with the repercussions of Russia's invasion of Ukraine.

"We have advanced our agenda," he said, flagging the work that had been done to regulate large tech companies and online content, the agreement on an EU minimum salary law and on gender quota to boost female participation at the board level of large European companies -- the latter of which had been stuck for a decade. 

He also hailed the leaders' backing of the Strategic Compass, which for the first time outlines a common vision for the 27 member states on the EU's place in the role, the threats it faces and how it should tackle them. 

"We have advanced our agenda," he said, noting that "this agenda has also been very coherent with this geopolitical change" as war returned to Europe.

"It has only reinforced, accredited, validated the conviction at the heart of our work of the need for more sovereignty" for Europe, he said. 

The Czech Republic will lead the bloc's agenda, with its rotating six-month presidency kicking off on July 1.

"I would like to wish Prime Minister Petr Fiala much courage," Macron offered. 

EU to build European Political Community 'simply', Macron says

The French president, whose six-month term at the helm of the EU comes to an end on June 30, gave more details about what leaders agreed on regarding the construction of a new entity that would allow for closer relations with European non-member states. 

"We will do things very simply," he said, adding that it will be the reverse of what the EU has typically done which is to build a new institution before clear objectives have been laid out.

It is for now tabled as a series of meetings at the leaders' level with the aim to "ritualise and progressively structure it", which he said is a "very pragmatic way to move forward."

"We will invite from Iceland to Ukraine," he continued, and its "border will go to the east of the EU including if I may say Ukraine and Moldova". 

EU preparing to deal with further energy supply disruptions: VDL

The President of the European Commission Ursula von der Leyen said that her institution is said that working on a Common European Emergency Demand  Plan.

She said she would present it to the leaders in July.

"We've learnt our lesson from COVID-19," she said, in that when EU member states work together, "we are strong and we have an enormous impact."

Russia, the EU's main supplier, has partially or totally cut deliveries to 12 member states so far, she noted.

Asked about the contracts the EU has struck with alternative sources of gas supply, she said that Liquified Natural Gas (LNG) deliveries from the US have risen 75% this year compared to last year while Norweigian pipeline gas is up 15% and deliveries from Azerbaijan are up by 90%. She also flagged contracts recently signed with Israel and Egypt.

Overall, Russia provided 150 billion cubic metres (bcm) of gas annually before the war that would have to be replaced given the EU has pledged to reduce by two-thirds its imports from Russia by the end of the year.

US deliveries should total 15 bcm this year and rise by a further 50 bcm in the following years.

The EU has also committed to cutting its imports of Russian oil by 90% by the end of the year.

For von der Leyen, the EU's shift away from Russian fossil fuels represents "a perfect business opportunity to gain a new, very important client over time and to go into the vacuum that Russia is leaving" for other countries.

The Commission chief also emphasised that it is important for the EU to ensure that "the overall network of interconnectors and pipelines in the EU is fit for purpose so you can have flows in all directions."

The Commission's plans will also "look into potential curtailment or smart energy-saving measures", she said. 

Finally, she reiterated that "the euro area is forecast to continue growing in 2022 and 2023 although aby less than anticipated before the war."

"The war in Ukraine is having a heavy impact both on growth and on inflation," she stressed. 

German Chancellor Scholz says EU needs to change to be capable of having new members

German Chancellor Olaf Scholz said that the EU had not made as much progress as they'd like on enlargement.

"We need to be capable to absorb new members. We need institutional reforms that are urgently necessary," the German Chancellor said at a briefing following the summit, including majority voting (instead of unanimity) to "make sure that the rules of democracy and the rule of law are applied."

He also said that the size of the Commission would need to be dealt with after new accessions.

"It cannot be that the Commission enlarges as the European Union enlarges, I don’t think that makes sense," he said.

Italy in favour of decoupling North Macedonia and Albania's talks in event of further delay 

Italy is in favour of splitting North Macedonia and Albania's EU candidate dossiers in the event of further delay to beginning accession negotiations, Prime Minister Mario Draghi said after the EU Council summit.

Bulgaria has vetoed launching accession talks for North Macedonia, which has also put on hold negotiations for Albania whose candidatures are being considered together.

Read more about the Western Balkans' bids to join the European Union here.

Here are the conclusions on economic issues

Watch the final press conference from the European Council summit here

Summit is over

Say 'euro adoption'!

Albania calls for EU to 'act fast' following Bulgarian vote

Albanian Prime Minister Edi Rama reported on Twitter that he has been in touch with the leader of the Bulgarian opposition GERB party, Boyko Borissov.

"His party GERB and others saved the face of Bulgaria and the EU! Now EU should act fast," he wrote.

Albania's membership has been coupled with the Macedonian one which means that it was collateral damage in the tussle between Sofia and Skopje and was also unable to proceed to negotiations with the EU. 

Bulgarian PM hails MPs' 'historic' decision over North Macedonia

"The integration of the Western Balkans is the strategic interest of the European Union," Kirill Petkov wrote on Twitter.

Could the Iberian price cap be applied to the entire EU?

Back in March, EU leaders gave the blessing to a joint Spanish-Portuguese proposal to establish a cap on electricity prices across the Iberian Peninsula. Both countries argued they are unfairly exposed to the volatility of gas markets, despite having a great share of renewables in their total energy mix. They also said the Iberian Peninsula is poorly connected to the rest of the bloc, creating a sort of “energy island” with its own particular characteristics. 

The European Commission, which has to approve every measure of state aid that can disrupt the single market, agreed with their reasoning and gave the go-ahead. The measure is meant to cap the price at €40 per megawatt in the first six months, with a gradual increase after that until reaching €70 per megawatt in the last month. The two governments will spend €8.4 billion measure to subsidise the scheme. 

The Commission approved the temporary remedy on the basis of an EU Treaty provision that allows exceptional state aid to address a “serious disturbance.” 

Could the Iberian model be applied to the entire EU?

This is one of the discussions taking place today at the European Council, with Italy leading the charge with its own proposal to establish an EU-wide cap on electricity prices. It’s still unclear how such measure would work in practice, given the economic divergences between member states and their highly different energy mixes, and how utilities would react to such forceful market intervention. 

Last month, the European Commission said that “an administrative price cap on gas might be necessary at EU level in response to a full supply disruption. If introduced, this cap should be limited to the duration of the EU emergency and should not compromise the EU's ability to attract alternative sources of pipeline gas and LNG supplies.” 

Bulgarian MPs approve lifting North Macedonia membership veto

Lawmakers voted on a proposal similar to the one presented by the French presidency -- which requries an amendment to the Macedonia Constitution recognising the country's strong cultural and historical ties with Bulgaria -- but that includes the EU as a guarantor that its interests will be protected. 

The decision was adopted with 170 votes in favour, 37 votes against and 21 abstentions. 

It now needs to be formally endorsed by the government of Kirill Petkov, who lost a no-confidence vote on Wednesday.

But Petkov said from Brussels on Thursday where he is taking part in the EU Council summit that he is ready to move quickly to resolve the situation.

North Macedonia started its bid to join the EU in 2005 but has been blocked from starting negotiations by multiple vetoes.

Greece objected to the country's name but that was resolved in the summer of 2018 with a historic deal. Bulgaria then imposed its own veto over cultural and historical ties. 

Croatia gets all-clear to join the euro

It's official! Croatia will become the twentieth member of the eurozone after EU leaders approved the move.

This comes after a recommendation from the Commission earlier this month, which suggested the small country of 4 million should start using the single currency on 1 January 2023 as it has fulfilled all the necessary criteria.

Estonian leader Kaja Kallas welcomed the decision by tweeting that it will "make Croatia and eurozone stronger."

Economic meeting running over: Senior EU official

This morning's session about the economy is taking longer than anticipated with leaders running over their allotted slots to present what their governments have been doing to tackle the cost of living crisis and rampant inflation, a senior EU official has told us.

On gas prices, leaders are working on a draft text on how to best confront this issue together but the idea of price caps, although mentioned, doesn't appear to have gained much traction and was not at the heart of the debate, the official noted. 

Discussions instead focused on how member states can interconnect as much as possible and help each other in terms of supply. 

Another idea apparently not taking root is that of a summit in July. 

Why some EU leaders want to 'decouple' gas from electricity prices 

Since energy prices began to soar in autumn 2021, several EU leaders have repeatedly demanded a “decoupling” of gas and electricity.

Spain, Italy, Portugal, Greece, France and Belgium are among those who have backed the move, arguing Russia’s invasion of Ukraine demands a higher degree of market intervention. Italy is even promoting an EU-wide cap on gas prices, which is set to be discussed at todays’ summit.

The EU’s wholesale electricity market works on the basis of marginal pricing, also known as "pay-as-clear market". Under this system, all electricity suppliers – from fossils fuels to wind and solar – bid into the market and offer energy according to their production costs. The bidding starts from the cheapest resources – the renewables – and finish with the most expensive one – usually natural gas.

The pro-intervention group believes this system has become problematic and is causing a contagion effect. Since most EU countries still rely on fossil fuels to meet all their power demands, the final price of electricity is often set by the price of coal or natural gas.

If gas becomes more expensive, electricity bills inevitably go up, even if clean, cheaper sources also contribute to the total energy supply. Russia’s decision to cut gas supplies to several member states has only exacerbated the upward trend on prices.

But the push for intervention is not widely shared. In fact, it is adamantly opposed by countries like Germany, the Netherlands and the Nordics, who defend the current system because it guarantees transparency and promotes investment in the cleaner resources. They also fear political meddling will only add more disruption to an already volatile market.

Russia striving for 'serious energy crisis': Poland

Mateusz Morawiecki told reporters leaders will discuss "the issue of Russia's energy blackmail against Europe", adding that "Russia would like to prepare a serious energy crisis."

First European Cooperation meeting to take place in Prague: Fiala

The Czech Prime Minister, who will assume the rotating six-month EU presidency on July 1, has announced that a first informal summit on wider European cooperation with non-member states in Prague.

"Ukraine could be one of the guests," Petr Fiala flagged.

Everyone 'concerned' about inflation: Martin

" Everyone concerned about chasing inflation and about adding fuel to inflation," Irish Taoiseach Micheál Martin told reporters as he arrived for the second day of meeting with his EU counterparts.

He said there would be discussions about this "and perhaps looking for a more common approach on some issue in respect of the inflationary cycle and how Europe as an entity combats this."

"It's far more complex than, say, procuring a vaccine. You know, that was a major breakthrough for Europe. This was obviously a much more challenging situation, given the energy issue and the clear decision of Putin to ramp up the energy crisis potentially for the winter in cutting gas supplies to Germany and other EU states. So we are looking at a very challenging winter in terms of the energy crisis and that will have a follow-through in terms of famine and food. And that is a concern," he also said.

He acknowledged the "very real risk" of inflation and stressed that " that's why this particular period has been navigated very carefully."

He argued that although member states are impacted differently which might require them to take different approaches, "certainly on energy, there would be a sense amongst some leaders that if common procurement, for example, could develop on energy, that would help the price situation." 

Croatia 'ready for the eurozone': Plenković

Andrej Plenković said that today's endorsement for the introduction of the euro in his country is "an excellent signal for Croatia, for Croatia's economy."

He branded it a "deserved and merited decision" and noted that it will be appreciated by other euro users as "70% of tourists that come to Croatia also come from the eurozone."

"Croatia is ready for the eurozone and it will sustain the pressure," he maintained, noting that having the euro will also help the country's economy be "better prepared to sustain" shocks.

Eurosummit now underway

'Ukrainians paying with their lives, we're paying with our wallets': Latvia

Asked about the impact the war in Ukraine is having on the economy, Arturs Krišjānis Kariņš stressed that "Ukrainians are paying with their lives and we are paying with our wallets and it's difficult to compare."

"It’s important that we speak with one another and see if it would be best to take common measures because they would be then most effective," he argued. 

Regarding the possible additional summit in July, he gave a similar response to Sweden's Andersson, explaining that "if there is a need I'm, of course, willing and happy" to participate, but adding that "the question is, is there a result of all of us coming together?"

"If there are decisions to be made this would be a good reason," he said.

On enlargement, he branded the previous day's decision as "very good news for Ukraine and Moldova and I think it's very good news for the EU."

He said the bloc's decision is the "exact opposite of what Moscow was aiming for" when it launched its invasion of Ukraine on 24 February. He argued Russian President Vladimir Putin was hoping a war would lead to a more disunited Europe and that he wished to "divide and rule and this is not working at all in the EU right now."

He also called for "a more robust (NATO) presence in the Baltics".

EU needs more gas infrastructure: Scholz

The German Chancellor also took some time to talk to the press this morning, saying that "we need to discuss this hard situation together" and in particular how to offer a common response to the economic challenges the bloc is facing.

"We need to develop our infrastructure so we can import gas from other countries," he noted. This comes after Berlin announced that it is currently receiving 60% less gas than ordered from Russia.  

He stressed though that "we have stability."

On enlargement to the Western Balkans, Olaf Scholz said that "all six can trust Germany to will support their path to Europe" and that the EU "will stick to our promises."

Member states should look for 'national solutions' to cost of living crisis: Slovakia

Eduard Heger, Prime Minister of Slovakia, said that the EU has "to realise inflation will stay with us for a longer period" and argued that "it's important to really come up with national solutions."

He used as an example the deal his government struck with a nuclear power provider to give "guaranteed prices for the next two years" and urged other governments to follow suit and work "with the market".

"Right now, as I said, it’s very important that every country does what’s in its forces," he went on. "We have to be very wise and always think of the sustainability of public finances, that’s very important because COVID cost us a lot of money so we have to think twice now."

Inflation pushing EU in 'difficult situation': Andersson

Swedish Prime Minister Magdalena Andersson said as she arrived that the bloc is facing a "difficult situation with inflation and the shortages of gas".

She also argued that "what seems to be an easy solution, for governments to out more money in the pockets of our citizens" is "not really a solution and this is something that we have to discuss."

"Of course, we have to help the most vulnerable households," she said.

Asked about a possible summit in July, she said that "this is up to Charles Michel to see what is necessary but if we have an extra meeting it would be for us to make a decision otherwise it will be maybe not the most productive way of using our time."

Risk that inflation could become embedded in euro economy: Donohoe

The President of the Eurogroup Paschal Donohoe told reporters that "we can expect for this year that still we'll be growing" noting however that inflation and energy could provide significant headwinds.

"We do need to acknowledge the risks that we could face if inflation does become embedded in our economies," he said, noting that it's battling inflation while ensuring the bloc doesn't fall into a recession is "a demanding balance to get right" for policy-makers. 

He described himself as "absolutely confident" though that the bloc will be able to "maintain a political consensus on what is appropriate for the euro area."

"This is a common currency zone that is so much stronger, so much more resilient than we have been" in the past, he also emphasised. 

Bosnia still has ‘homework to do’, says Bettel

Luxembourg Prime Minister Xavier Bettel said that the discussion about Bosnia and Herzegovina took so long yesterday because the country still has “homework to do” before being granted EU candidate status.

He said granting Ukraine candidate status showed “strong moral support” for the country.

Bettel called the decision about Ukraine’s candidate status a “historical one” but added that “candidate status is not being a member but shows there is a way.”

He suggested that the situation with Bulgaria’s veto on starting accession talks with North Macedonia and Albania could change soon.

EU must buy gas together, impose price caps: De Croo

Belgian Prime Minister Alexander De Croo stopped by reporters' microphones on his way into the Council meeting room to reiterate that "we are heading for a winter that may be difficult" because Russia has started to reduce deliveries of gas to several member states.

"Germany is already thinking that during the winter they will have a gas shortage, the impact will be huge," he stressed.

He also once more emphasised his belief that the best way "to get through" is "if we do it together."

"We should buy together, we should use price ceilings," he said, adding that "the Commission should really take the lead"

What this Community will look like

An EU official this community would for now consists in regular meetings at leaders' level with countries the bloc has close relations so that would include all those in the running to become EU members but could also include the UK.

The idea is to have political discussions to create a mutual understanding and a strategic culture to strengthen security, stability and prosperity on the Old Continent.

Charles Michel as Council president has been tasked with working to move this project forward, the EU official said. 

Here are the conclusions on Wider Europe

While most of the journalists had left the building following the announcement over Ukraine, Moldova and Georgia, leaders went back to work to discuss Macron's proposal for a European Political Community.

Here's what they concluded:

Good morning and welcome to day two of the EU Council Summit. Today it's all about the economy but the final press conference, the ultimate as EU President for French leader Emmanuel Macron, should provide some good lines too.