§ Mr. Lamont
European Community Finance Ministers held an informal meeting with central bank governors in Kolding, Denmark on 21 to 23 May. The Governor of the Bank of England and I represented the United Kingdom.
The meeting discussed reports by the Monetary Committee and Central Bank Governors Committee on recent events in the exchange rate mechanism. It was agreed that specific conditions had applied in September 1992 with, in particular, an exceptionally large differential between United States and European interest rates. Member states emphasised the need for greater economic convergence and reaffirmed their support for the European monetary system. I made clear that the return of sterling to the ERM could not be contemplated until the requirements of United Kingdom and German monetary policy had come more closely into line. Copies of the reports of the Monetary Committee and Central Bank Governors Committee have been placed in the Library of the House.
Ministers also discussed German proposals for a harmonised system of withholding tax on interest paid to EC residents. It was agreed that these ideas needed further preparation before being considered by the Council. In addition, there was a discussion of the issue of unitary taxation in the United States, in the light of my announcement to the House on 13 May, Official Report, column 528. Other member states strongly supported the United Kingdom position and it was agreed that the 667W presidency would write to the United States Administration underlining the importance member states attach to an early resolution of the problem.
The meeting also examined the relationship between environmental and economic policies and briefly discussed the Commission's proposals for an EC carbon/energy tax. This proposal is expected to be discussed by the Council at its next meeting.
Finally, Ministers discussed the unemployment situation in the Community and their remit from the Edinburgh European Council to consider measures to improve the functioning of the labour market.
The meeting was informal and there were therefore no votes or formal decisions.