Luxembourg, 17/05/2005 (Agence Europe) - The Eurogroup has expressed “serious concern” about the economic situation of the euro zone, its president, Jean-Claude Juncker, said in Luxembourg on 13 May after the meeting of the euro zone's twelve finance ministers. The Commissioner for economic and monetary affairs, Joaquin Almunia, has “mitigated” feelings as the situation in Italy is one of recession, whereas, in Germany, it is more thriving than expected. Two other subjects were evoked by the ministers: the new common sides of the euro coins and the improvement of euro zone representation in international bodies (G7, G20, IMF).
Speaking before the press, Jean-Claude Juncker stressed the “good news” shown in the latest figures on German growth in the first quarter of 2005 - “better than expected”, according to Commissioner Almunia. Mr Juncker nonetheless spoke of elements that are more worrying: oil price developments and the lack of consumer and investor confidence. In this respect, the Luxembourg prime minister said: “There are differences which do not cause great concern”, while others, “quite substantial”, are more worrying. The ministers therefore agreed to look at the matter more closely and the Commission will report at the next Ecofin in June on the subject of these growth differences. In addition to the German results, Commissioner Almunia pointed to the “good growth in Spain” and the fact that “even in France one hopes the figures will be quite positive”, although growth declined during the first quarter 2005 in Italy (-0.5%) and the Netherlands (-0.1%). On the subject of possible excessive deficit procedure against Italy, Mr Almunia answered the press that he hoped the budgetary figures for 2004, which are being discussed with Eurostat, will be finalised “by the end of the month”. “The Commission will now take its decision as soon as possible, probably early June”, Mr Almunia said, not ruling out the fact that the negative results of the first quarter are taken into account in his analysis. He immediately added, however, that “even in Italy, it is not all bad news”. Although Italian figures were expected to be “less pessimistic”, Mr Almunia stressed that “the tax revenue figures of the first two months of the year is better than predicted”.
Despite the current difficulties, Mr Juncker urged Member States to continue structural reforms through the Lisbon national action programmes, so that the “European social model remains accessible to the largest possible number”. He welcomed the Commission's initiative to send, by 15 October, “missions to each of the 25 Member States to prepare these national reform plans”. The exercise will be essential, Mr Juncker says, asserting, without wishing to give any examples, that “the countries that were the least competitive when we entered the euro zone have today, relatively speaking, become even less competitive”. The automatic rebalancing that some expected did not happen, he noted, while Commissioner Almunia recalled the negative impact that such divergence has on the euro zone as a whole. These growth differences and the differences in productivity and inflation rates is a burden on the most disciplined countries, Mr Almunia explained.
Euro coins to change to take enlargement into account
The common sides of the one and two euro coins are soon to change to take into account EU enlargement in May 2004 to ten new member countries. This decision by the Eurogroup will be carried out in two phases: 1) the new members of the euro zone (the first, including Slovenia, are expected to join in 2007) may mint coins that have a common side representing the whole of the EU25 territory. The common sides currently in circulation show a map of Europe of Fifteen; 2) this practice will become general when new coins are issued throughout the euro zone. “The countries that are to introduce the euro will have the whole of EU territory shown on the common side of coins, and the whole of the Union's territory will become the rule when new coins are minted throughout euro zone countries, given that the common side may perhaps no longer be a map but some other design”, Mr Juncker specified.
According to Mr Almunia, the Commission hoped to better define Europe as it really is, after enlargement, on the common sides of coins. In June, the Commission will present a communication with recommendations to Member States regarding the national sides of coins. The aim of this document
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will also consist of reminding States that aspire to euro zone membership that there are EMU rules to be respected.
Towards better euro zone representation in international bodies
The euro zone is suffering from excessive representation in the international financial bodies such as the G7 or the G20, and must reflect on making things more rational, Mr Juncker says. In answer to a question put by reporters, he states that, to date, the euro's external representation has not given rise to any major, or minor, incident. “We have the impression, however, that, as Europeans, we are sometimes too numerous at (international) meetings to really make such meetings forums where we can deliberate with a more pronounced feeling of efficacy”, Mr Juncker explained. The Eurogroup is therefore examining ways to guarantee that Europe has an operative presence at such meetings, he added. “This is true for the G7 in which I take part as president of the Eurogroup. We would also like the Commission to be able to take part in the work of the G20 which, tomorrow, will be the most important international financial institution”. “It will be necessary to rationalise (this international representation). We are currently discussing ways and means to do so”, he stressed, saying jokingly: “I do not wish to be the only one left at the meeting”. The external representation of the euro zone “is not satisfactory”, Mr Almunia admits. “We have a single currency and the coordination of the euro zone countries within the IMF should be strengthened”, the Commissioner added.