§ Mr. BurnsTo ask the Chancellor of the Exchequer if he will make a statement on the outcome of the latest meeting of the European Community's Economic and Finance Council.
§ Mr. Kenneth ClarkeThe Economic and Finance Council of the European Community met in Brussels on 12 July. I represented the United Kingdom.
The Council discussed the convergence programme circulated by the United Kingdom in May of this year. The programme reflects the Government's economic strategy for sustained non-inflationary growth set out in the "Financial Statement and Budget Report" published on Budget day. In discussion, I underlined the Government's determination to take the action necessary to reduce the budget deficit. I also drew the Council's attention to the emerging signs of broad-based economic recovery, our recent good record on inflation, and highlighted the favourable prospects for growth in the United Kingdom economy by comparison with other member states.
The Council welcomed the United Kingdom programme as ambitious and built on realistic assumptions and there was support for the Government's commitment to a firm anti-inflationary strategy. The adoption of a budgetary consolidation strategy and the measures taken in the Budget were welcomed. Ministers also noted the substantial progress already achieved by the United Kingdom in introducing structural reforms and welcomed the Government's continued commitment to supply-side reform.
The general economic situation in the Community was also discussed in the context of the Council's six-monthly multilateral surveillance discussions. Ministers underlined the importance of the conclusions of the Copenhagen European Council on economic recovery and unemployment. The Council also stressed the need to address fiscal imbalances and to create conditions which would permit further reduction of interest rates in some member states. It was agreed that national convergence programmes were a valuable instrument of economic policy co-ordination. Without prejudice to the national responsibility for programmes, it was agreed that it would be desirable for them to cover a common time horizon and for them to be updated annually.
Ministers had a first discussion of the Commission's ideas for interest rate subsidies for European investment bank lending to small and medium-sized enterprises and bridging finance for structural funds spending in the context of a general discussion of follow-up to the European Council. These proposals are likely to return to the Council later in the year.
Finally,, there was a short discussion of tax-free allowances for travellers entering the Community from third countries and travellers within the Community. Germany maintained its objections to the increases proposed.
No formal votes were taken. The Council conclusions on the United Kingdom convergence programme and the communiqué on multilateral surveillance were agreed by consensus.
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