EU starts drive to cut prices

FINANCE MINISTERS of the European Union yesterday took the first step towards lowering the prices of consumer goods and services across Europe.

They instructed the European Commission to investigate discrepancies between the cost of cars, videos, computer software, telephone and bank charges in the 15 member states.

The Commission will report in a year on measures to harmonise the prices of consumer goods as part of a drive towards accelerating completion of the European single market.

European finance ministers, meeting in York during Britain's EU presidential year, unanimously adopted a policy document, Economic and Structural Reform: The Way Forward, a key section of which demanded "detailed assessment of the integration of EU markets, examining price dispersions".

Massive disparities in prices have been identified by treasury officials who point to the US as a model for lower consumer prices. Pop music CDs are cheaper in America than in the UK, but they are even dearer in Germany and France. Cassettes are most expensive in Denmark. Hand-held computer games cost most in Germany and France.

But Britons pay most for their cars. A Fiat Punto costs 21 per cent less in France, and a Renault Megane can be bought for 22 per cent less in Germany. A VW Passat is 14 per cent cheaper in its country of manufacture.

Chancellor Gordon Brown decided to take action on the price disparities after asking his officials to draw up "league tables" of the varying costs of goods and services in Europe. The tables also showed that an overdraft is twice as expensive to run in Germany as in the UK - but banking is cheaper there if you stay in credit.

A Treasury spokesman said: "The cost of consumer goods and services across Europe is still a lottery. This scandal should have been sorted out by the introduction of the European single market. Bringing down prices will be good for consumers, business and jobs."

Ministers also agreed that Mr Brown should head a European Union mission to east Asia in May, as part of a European drive to help the tiger economies deal with the financial crises that have been battering the region.

The Chancellor is to visit Korea and Indonesia, which have suffered the worst, but it is not yet clear whether he will travel to Japan, the country which the developed world hopes will lead its neighbours out of the slump.

The council reaffirmed that the EU needed to provide technical assistance to east Asian countries, particularly in restructuring financial institutions and contributing to a World Bank fund.

The issue of duty-free sales was not raised, indicating that its abolition will proceed on schedule despite protests from cross-channel ferry companies and French workers who last week shut down the port of Calais.

As the ministers met in York, a plane droned overhead towing the slogan "Keep our pound" and anti-euro demonstrators gathered outside. But the city, festooned with European flags, sold beer at the French rate of excise duty - 25p cheaper. The Treasury said nothing.