Select Committee on European Scrutiny First Report

Letter from the Private Secretary to the Chancellor of the Exchequer to the Clerk of the Committee


I am writing to keep you informed of the outcome of the Economic and Finance Council of Ministers meeting in Luxembourg on 5 June which the Chancellor of the Exchequer attended.

The Broad Economic Policy Guidelines (BEPGs) for 2001 were agreed and will now be submitted to the Gothenburg European Council on 15-16 June for discussion by Heads of State and Government following which they will be adopted by ECOFIN. The Commission has taken on board UK comments and the UK specific guideline that the expected ratio of UK public sector current expenditure to GDP should not exceed 37.3 per cent has been removed.

The Presidency and Commission reported their discussions with third countries on taxation of savings. The Council agreed that at its meeting in October, it should agree on a mandate for negotiations with third countries. The Chancellor reported on discussions with UK dependent territories.

The Council agreed that a High Level Working Party of representatives of Member States, nominated by Finance Ministers, will be established in order to assure the co-ordination of work and to achieve parallel progress on the tax package. A report on the tax package will be presented to the Gothenburg European Council. ECOFIN noted a report on the work of the Code of Conduct group during the Swedish Presidency, and agreed that its work should continue.

The Presidency introduced its report on progress on the proposal for a Directive on the taxation of energy products. The Chancellor made clear that progress on this dossier would depend on full liberalisation of Europe's energy market.

Ministers noted the Presidency's report on VAT and E-commerce and remitted the issue to a later meeting.

The Council noted the Commission's fourth six-monthly progress report on the Financial Services Action Plan.

ECOFIN discussed the strategy for sustainable development, which will be adopted at the Gothenburg European Council. The strategy consists of three pillars: economic, environmental and social.

Macro financial assistance of 300 million euros to the Former Republic of Yugoslavia was agreed in principle.

The Council gave a broad welcome to the Commission's proposals for the recasting of the Financial Regulation and an indication of areas where further work was required. It urged the Commission to bring forward a revised proposal as a matter of priority so that detailed consideration by the Council could commence.

The Commission presented its Annual Report on the Community's fight against fraud and the accompanying Action Plan for 2001-2003. There was broad political consensus on the Conclusions which would now be adopted at the Gothenburg ECOFIN on 15 June.

Two Directives updating the EC's legal framework for collective investment vehicles such as unit trusts were adopted without debate.

15 June 2001

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Prepared 30 July 2001