Brussels, 13/05/2003 (Agence Europe) - On Monday evening, at the end of a meeting that took more than four hours, the Eurogroup Finance Ministers declared that a strong Euro was in the interests of the Zone. They also said that it was more than likely that growth would take off again in the second semester, given that the British-American victory in Iraq has removed geopolitical uncertainties.
"A strong Euro is in the interests of the Zone", said the Greek Economy and Finance Minister, Nikos Christodoulakis, acting President of the Ecofin Council, reading a statement approved by the Eurogroup and the European Central Bank (ECB). This view was shared by Commissioner Pedro Solbes, who emphasised the fact that even though a strong currency puts the competitiveness of Euro-Zone products at a disadvantage on external markets, it helps to contain inflation, and forces European businesses to increase productivity. Mr Solbes did however acknowledge that it was important to avoid too much volatility in the currency. When speaking of growth, Mr Christodoulakis and Mr Solbes showed a good deal of confidence. "We predict that the economy will bounce back in the second semester (2003)", said Mr Solbes, also forecasting a return to growth of around 2.3% next year.
Unexpectedly (see yesterday's EUROPE, p.8), Mr Christodoulakis said that Eurogroup did not raise the issue of a reduction in the reference rate by the ECB. This was contradicted on Tuesday morning by the French Economy Minister, Francis Mer, who said that the ECB had clearly indicated to Eurogroup that it would be prepared to lower its interest rates if the economic situation worsened. According to the Greek Presidency, Eurogroup also steered clear of the issue of France's state finances. However, Nikos Christodoulakis thanked the German Minister, Hans Eichel, for the information he sent to his Euro-Zone partners about his country's plans in terms of reducing its deficit. Eurogroup also looked at Austria's stability programme, and noted Portugal's willingness to respect its budgetary commitments, and the undertaking by the Netherlands to provide information on the state of its public finances by July.
Lastly, speaking about the Convention on the future of Europe, Mr Christodoulakis indicated that all the Ministers agreed that preserving the informal nature of Eurogroup was vital in preparing decisions to be taken by Ecofin, but they hoped that Eurogroup would be referred to in a protocol annexed to the future Treaty, in order to "increase its profile".