Brussels, 22/01/2002 (Agence Europe) - The ministers of finance and the economy of the euro zone, meeting within the Eurogroup from 20.00 to 23.00 hrs. on Monday, had informal discussions under the chairmanship of Spanish Minister for the Economy Rodrigo Rato on four topics: - the general economic situation and the monetary and fiscal policy-mix in Europe (speaking in this debate were the European Commission, the European Central Bank, and the Economic and Financial Committee); - budgetary policy, on the basis, notably, of a Commission document setting out an overall analysis of the updated stability and convergence programmes of Member States; - analysis of a study on developments in the labour market (early retirement schemes and social benefits); - adoption of a declaration on the introduction of coins and banknotes in euro in which ministers expressed satisfaction with success of the operation for companies, retailers and public administrations, as well as for citizens.
Regarding the debate over budgetary policy, the ministers of the Eurogroup considered that Germany's budgetary policy was "correct", while stressing that the degradation in the country's public accounts was essentially due to the economic slowdown. This is what Mr. Rato stated on behalf of the countries of the euro zone, making the same observation regarding Portugal. German Finance Minister Hans Eichel said that his partners had not criticised him for his country's public finances having gone off track (the German public deficit could reach 2.7% of GDP in 2002, a figure close to the 3% threshold set in the Maastricht Treaty). Mr. Rato continued by saying that in no case "should any budgetary policy modification be contemplated". Asked about a possible "early warning" by the Commission over the German public deficit, Commissioner Pedro Solbes replied: "for now, the Commission has not taken that initiative". Solbes did not, however, rule out such a warning being sent out. Mr. Solbes added, regarding the Commission document on the stability and convergence programmes that "it is the first time that we have undertaken an exercise of this type and the first time that we have worked on the basis of the code of conduct adopted last July, which allowed for better comparability of programmes and fairer treatment". Indeed, he went on, fairer treatment was made possible in the sense that the updates of the different programmes will be able to be assessed in the two EcoFin Councils (January and February) He concluded that: - the Stability Pact was working well; - the automatic stabilisers have come in to play in most countries; - the latter have resisted the temptation to adjust the economic cycle. He also considered that progress had not been identical in all countries and thus "certain budgetary decisions still need implementing in certain countries". "The better economic situation expected for 2002 should allow for the creation of conditions to pursue the budgetary cleansing process that set the pace in 2001", the Commissioner also explained, adding that according to information contained in the stability and convergence programmes, "structural deficits should improve over this year and in 2003". The budgets of Member States that still have deficits should reach a balance in 2003 or 2004, in compliance with undertakings made, he further stressed.
The Eurogroup and the Commission renewed their confidence in the possibility of an economic recovery in the first half 2002. "The main risk situation for deceleration is easing", declared Mr. Rato. According to him, the "policy-mix" so far chosen "complies with the current European economic situation". Consequently, he concluded, "current conditions at monetary and fiscal level are promising for the perspective of a recovery of the European economy". For Mr. Solbes, "the economy in the euro zone shows certain signs of stabilisation. A gradual recovery should begin in the first quarter of this year, but genuine acceleration is not expected before the end of 2002".
Furthermore, ministers were pleased with the success of the placing into circulation of coins and banknotes in euro: "three weeks after the physical introduction of the euro, one may say that the operation is completely over", Rato enthused.
The Eurogroup also ended a series of discussions and exchanges of good practice on the development of the labour market, by adopting the terms of a brief to provide to the Commission and Economic Policy Committee to pursue studies in this field. Ministers considered that, in most countries of the euro zone, reforms needed pursuing to improve job supply and thereby increase the level of employment and contribute to supporting public finances in the context of the ageing populations. They also noted that progress had been made to render fiscal systems more attractive for employment.