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Germany denies blaming UK for weak euro
Gordon Brown and Hans Eichel at Monday's meeting |
The German Deputy Finance Minister, Caio Koch-Weser, has denied newspaper reports saying his country had accused the UK of undermining the euro.
On Monday, the struggling currency fell to a new low since its launch in January of $1.004 before recovering slightly.
According to the Times and the Daily Mail, the German Finance Minister, Hans Eichel, said the Chancellor, Gordon Brown, was to blame.
The papers said Mr Eichel had complained that Mr Brown's refusal to give way in talks aimed at establishing an EU-wide 20% withholding tax on savings had highlighted the problems of economic co-operation among EU nations.
The talks - in Brussels on Monday - ended in deadlock, with Mr Brown arguing that the proposals would cause the lucrative eurobond market to move out of London.
"Harmful"
Mr Eichel was reported to have said the failure of the talks had weakened confidence in the euro, which has been teetering on the brink of parity with the dollar.
The Times quoted him as saying: "It would be harmful for the international market and harmful for the common currency if we cannot agree on tax."
On Tuesday morning, Mr Koch-Weser told BBC Radio Five Live there had never been any intention of making a link between the currency and the savings tax.
He indicated he thought it was wrong - and unhelpful politically - of the British newspapers to interpret Mr Eichel's comments that way.
Tax dodgers
Germany had been keen to introduce the new tax - which would have been levied at source on investment interest earnings - to help crack down on people moving money out of the country to avoid paying tax due.
Mr Eichel said the issue was vital to finding an overall solution on a package of measures to combat tax evasion.
He said: "If we don't reach a solution on the witholding tax issue, the whole tax package will fail in Helsinki," - referring to the EU leaders' summit in the Finnish capital on 10-11 December.
Mr Brown said he had no intention of backing down: "We will not agree to any directive which is against the national interest."
The Times quoted a Treasury spokesman as saying: "What would really damage the single currency would be agreeing to a directive which was flawed."
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