§ 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. LamontThe Economic and Finance Council of the European Community met in Brussels under my chairmanship on 13 July. The Paymaster General represented the United Kingdom.
The Council held one of its six-monthly multilateral surveillance discussions of the economic situation in the Community. The Council agreed that prudent monetary and fiscal policies must be maintained and that there was a further need to reduce structural rigidities. The Council also welcomed the Italian Government's recent package of measures designed to reduce their budget deficit.
The Council also discussed a programme for economic convergence submitted by the Netherlands. The Council noted the exceptional Dutch record of price and exchange rate stability, but emphasised that the recent increase in inflation must be quickly reversed. The Dutch commitment to targets for the reduction of their budget deficit and 706W their debt to GDP ratio was welcomed, as was their programme of structural reforms, privatisation, reducing subsidies, improving public sector efficiency and increasing labour market participation.
The Council also discussed Russia's need for medical aid and agreed that up to 150 mecu of the 1.25 becu loan already agreed by the Community for the countries of the former Soviet Union should be released in order to help the Russians to meet their medical needs. Balance of payments assistance for Albania in the form of a grant of 35 mecu from the Community budget was also agreed. A further tranche may also be considered at a later date for 1993.
Over lunch, President Delors and the German representative, Herr KÖhler, gave a brief report on the outcome of the recent Group of seven meeting in Munich and I set out my programme for the work of the Council under the United Kingdom presidency. I emphasised that my main priorities would be to work towards an agreement on the future financing of the Community, to complete the single market, to reduce the scope for fraud against the Community budget and to encourage free trade, noting in particular the importance of enhanced access to EC markets for the countries of Eastern Europe and the former Soviet Union.
The Council also held a useful discussion of the Commission's proposals for the future financing of the Community. A majority of member states agreed that the Commission's proposals for increases to the Community budget were excessive. Some useful new elements were introduced into the discussion, such as the scope for offsetting savings, the need for improved financial management and a greater role for the European Investment bank in improving economic and social cohesion.