Luxembourg, 05/06/2001 (Agence Europe) - The finance ministers of the euro-zone appeared concerned, Monday evening, by the slowdown in Euroland's economic growth after the US economy had touched down more violently than expected and the fact that oil prices remain high. Eurogroup President Didier Reynders said he was realistically confident. "We are realistic about the economic situation and confident about the potential of the euro-zone", he told the press on Tuesday. He stressed that the slowdown in the American and Japanese economies is increasingly like a "difficult landing". He urged for dialogue with oil producing countries to keep the price of oil at between $22 and $28. Commissioner Pedro Solbes spoke of a "deceleration in the economic activity of the euro zone", but, although he does not see these developments as very encouraging, he does not see the need to amend the European Commission's spring forecasts. Mr Solbes felt that the inflationary risks remain low, but did not rule out further pressure on oil prices during the second half of the year.
The Eurogroup president sought to play down the mediocre results of the euro-zone. "The first concern of the Eurogroup is the internal value of single currency. One euro is equal to one euro. We are in favour of good internal growth potential and controlled inflation", he said.
The finance ministers examined the Broad Economic Policy Guidelines (BEPG) for 2002. Didier Reynders pointed out that the Twelve plan, in the medium term, to ensure there is tax consolidation and to speed up implementation of structural reforms. He specified that "tax reforms cannot be carried out to the detriment of controlled spending". This discussion provided an opportunity for the ECB (European Central Bank) to recall the rules of budgetary orthodoxy, which gives priority to reducing deficits and calls for electoral budgets to be avoided (two countries, Germany and France, which expect electoral deadlines in the very near future, are particularly concerned). Furthermore, Eurogroup called on Italy to present its budget in July (we recall that the new Head of Government, Silvio Berlusconi, had announced, during the electoral period, a reduction in taxation, continued reduction in deficits and the resumption of major public works).
Regarding the preparations for changeover to single currency on 1 January 2002, the finance ministers restated their intention to strengthen the information campaigns and to maintain price stability. In a joint press release, they insist on the importance of double price labelling during the transitional period and on the neutrality of exchange operations, inviting administrations to set a good example by practising taxation rounded to the advantage of citizens.
Further tension between Presidency of ECB and that of Eurogroup
On Tuesday, Didier Reynders took stock before the press of the declarations by ECB President Wim Duisenberg, who had questioned the representative nature of the president of the Eurogroup last week, during an exchange of views with MEPs. "The president of the Eurogroup speaks on behalf of the Eurogroup", Mr Reynders pounded out. Visibly annoyed by Wim Duisenberg's absence at the meeting of the Eurogroup (the ECB was represented on Monday evening by its vice-president, Christian Noyer), Mr Reynders stated that "several Member States would prefer to have a direct exchange with Mr Duisenberg".