Economic and Finance Council

HC Deb 11 June 1993 vol 226 cc365-6W

Mr. Burns

To 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 Clarke

The Economic and Finance Council of the European Community—ECOFIN—met in Luxembourg on 7 June. The Paymaster General and I represented the United Kingdom.

The Commission informed the Council of its intention to publish revised economic projections for the Community on 16 June. These are likely to indicate less favourable growth prospects for most member states than the forecast contained in the annual economic report for 1993. By contrast, the revised forecast is expected to contain improved growth prospects for the United Kingdom and confirm the Commission's assessment earlier in the year that GDP growth in the United Kingdom will be greater than in any other major member state. There was a brief preparatory discussion for the Copenhagen European Council's examination of the economic situation in the Community.

The Council discussed the draft seventh VAT directive intended to provide a harmonised system for taxing second-hand goods and works of art. I indicated that the United Kingdom could consider a very low rate of VAT for imported works of art for the duration of the transitional VAT system, but only as part of an acceptable compromise on other outstanding aspects of the proposal. It was agreed that this issue would be considered further by officials before returning to the Council.

In discussion of the Commission's proposals for a carbon/energy tax, I made it clear that the Government had already announced measures in the Budget that would reduce carbon dioxide emissions in the United Kingdom; and that we did not see a need for a harmonised tax at Community level. The topic was remitted for further consideration by officials.

The Commission urged early progress on the proposed directive to abolish withholding taxes on cross-border interest and royalty payments between companies. There was no substantive discussion of this proposal.

The Council adopted conclusions on the Commission's annual report on fraud against the Community budget. I welcomed the Commission's recent efforts to address this problem and stressed the need for clear and measurable objectives and target dates in the Commission's action plan. The Council invited the Commission to provide an assessment of further specific improvements needed to increase the effectiveness of the fight against fraud. The presidency also reported on recent discussions with the European Parliament on a new inter-institutional agreement on budget discipline.

The Council reached a political agreement on the principle of Euratom loans for nuclear safety in eastern Europe and the former Soviet Union. Final adoption of the Council decision will take place once the European Parliament's opinion is available.

Finally, there was a brief general discussion of the Commission's proposed directive for deposit protection arrangements for credit institutions. There was broad support for the principle of a minimum directive in this area, although I stressed the importance of the principle of subsidiarity in this context.

The Council took no formal votes. The conclusions on the Commission's annual report on fraud and the political agreement on the principle of Euratom loans were approved by consensus.