Brussels, 21/01/2003 (Agence Europe) - The Economy and Finance ministers of the euro zone agreed Monday evening, at the meeting of the Eurogroup, to confirm the launch of procedures for excessive deficits against Germany and early warning against France and to adopt recommendations to get these countries to remedy their erring public finances. Berlin agreed to the recommendations that will be joined to this procedure without question, and notably an appeal to do all it can not to exceed the 3% threshold in 2003, which was not the case for France. The latter pointed out that it rejected the recommendations that it found unrealistic, like that of reducing its structural deficit (outside the uncertainties of growth) by 0.5% in 2003 (whereas the Commission considers that the French effort will only be 0.2%) and to reach a balance in its public finances in 2006 at the latest.
"This evening's discussions demonstrated very clearly that there was political agreement to take a decision" at the level of the EcoFin Council on Tuesday, declared Greek Finance Minister Nikos Christodoulakis, chair of the Eurogroup. "There were no objections to our proceeding … As for the details (procedures and recommendations), they will be discussed Tuesday within the EcoFin Council", Mr. Christodoulakis simply said. "We now have something very clear for Germany and France. A yellow card for France and an excessive deficit procedure for Germany", his Dutch counterpart, Hans Hoogervorst noted after the meeting of the Eurogroup.
"France will abstain when the EcoFin Council adopts the recommendations", explained a diplomatic source, meaning that the French Government will not vote against a text that will be adopted by a large qualified majority of finance ministers of the Fifteen, but will not consider itself bound by the recommendations that seem to it unrealistic. The rejection of forced budgetary improvements in 2003 may be explained by the risk of adversely affecting growth. As for the 2006 objective, France does not consider itself bound by a figure that has, it says, no more value than the passed deadlines - and not respected - of 2000, 2002 and 2004. The French stability programme, sent to the Commission in December, provides for a reduction in the public deficit to 2.6% of GDP in 2003, on the basis of "cautious" growth of 2.5% a year, the budgetary balance not being attained before 2007.
Estimates of 1.8% growth in 2003 remain valid
The Eurogroup also examined the economic situation in the countries of the eurozone. "Prospects for a revival of growth contained in the Commission's autumn forecasts constitute our starting point. The period of slower growth seems to be extending and the lack of performance of European economies can be explained by the external environment, the growing uncertainties of the geopolitical context and the excessively volatile stock markets", recalled Mr. Christodoulakis, who considered that growth should speed up in the second half of the year to reach 1.8%, in accordance with the Commission's estimates. "The European economy is not in recession, it is still experiencing growth even if at a slower pace", the Greek minister also concluded, recalling that in the period 1999-2002, the economic performance of the euro zone was better than that of the United States. Commissioner Pedro Solbes, also discarded any risk of recession in the first half of 2003. "The autumn forecasts are still our reference, even if downward risks have proven to be right since they were published", said Solbes, adding that it would be "premature to come up with new forecasts.
The economy and finance ministers briefly discussed the Commission's communication on co-ordinating economic policies. The debate on this subject will continue in February, the chair of the Eurogroup announced.