Economic and Finance Council (Hansard, 25 March 1994)

§ Mr. Kenneth Clarke

The Economic and Finance Council of the European Union (ECOFIN) met in Brussels on 21 March. I represented the United Kingdom.

The Council heard a report from the President of the Court of Auditors on the Community's 1992 budget. The Council agreed to recommend that the European Parliament grants a discharge to the Commission on the 1992 budget. The recommendation calls upon the Commission to report back on specific areas criticised by the Court of Auditors and on any follow-up action the Commission takes. I and others emphasised the importance the Council attached to improving financial management and tackling fraud in the Community budget. Later in the day the Commission trailed its forthcoming strategic programme for the fight against fraud in 1994. The Commission welcomed my right hon. Friend the Home Secretary's proposal for action under title VI.

The Council reached political agreement on the budget discipline decision. It will now go to the European Parliament for conciliation. The text of the decision makes clear that the guideline limit may only be increased or exceeded by unanimous decision of the Council and a 1997 deadline will be applied to the special arrangements for dealing with agrimonetary costs. The Council also agreed a declaration providing for a formula-based adjustment of the guideline to take account of enlargement.

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The Council discussed the new own resources decision but agreement on this was not possible because Italy maintained a general political reserve.

The Council discussed balance of payments assistance to the countries of central and eastern Europe. The Council agreed to provide 110 million ecus in assistance to Bulgaria in support of the proposed International Monetary Fund programme. The Commission indicated that it would put forward proposals for a further 40 million ecus of support to Bulgaria and 125 million ecus for Romania. These proposals will be considered in due course.

The Council discussed the convergence programme of Denmark which covers the period 1994 to 2000. The Council applauded the aim of the Danish authorities to fulfil the convergence criteria outlined in the treaty on European union in 1996, although Denmark is not committed to participating in stage 3 of economic and monetary union. However, it raised questions on some elements of the programme. In particular, it considered the assumptions on the revival of private sector expenditure slightly optimistic. These assumptions play an important role in the achievement of the programme's main targets, which include a reduction in unemployment and a reduction in the fiscal deficit following an initial temporary loosening.

The council took note of reports on follow-up work by the Commission on the White Paper and agreed to require the Economic Policy Committee to report regularly on member states' progress in implementing labour market reforms.

As requested by the December ECOFIN the Commission presented an interim report on contacts with non-member states on the proposed withholding tax on savings in the EU. The Commission's final report is expected later this year but it was made clear to the Council that any proposals on this subject would be unlikely to secure United Kingdom agreement.

The Council took note of an appeal by the Commission to make faster progress on the proposed directive on withholding taxes on interest and royalties.

The Commission presented its recommendation on the taxation of non-residents, noting that it would evaluate the extent to which member states had followed the recommendation.

There were no formal votes on issues discussed in the Council.