Brussels, 28/11/2005 (Agence Europe) - Recalling the growth figures recently published by the European Commission showing weak economic recovery in the euro zone, the Commissioner for Economic and Monetary Affairs said nothing about the prospect of the European Central Bank (ECB) putting up interest rates, when speaking on Monday afternoon at the EP Committee on Economic and Monetary Affairs. Joaquin Almunia simply repeated that he did not wish to add his voice to the debate out of respect for the ECB's independence. During quite a brief exchange of views, Mr Almunia said the coming deadlines within the context of implementation of the Stability and Growth Pact (SGP) will be decisive for the credibility of budgetary surveillance (EUROPE 9070). Over the next two or three months, excessive deficit procedure will be pursued, reactivated or initiated against the four largest economies in the euro zone: Germany (probably on 21 December), France (in January at the latest), Italy (in January) and the United Kingdom. At the end of March, the Commission will assess measures taken by Portugal before once again examining the cases of Greece and Hungary. Mr Almunia said that, with implementation of the procedure for this series of countries, they will be facing a crucial test for SGP credibility, which depends on the Commission's proposals and decisions taken by Council. He was keen to “look the challenge in a positive manner”.
The Commission's growth forecasts for 2005 (1.3% in the euro zone and 1.5% in EU25), 2006 (1.9% and 2.1%) and 2007 (2.1% and 2.4%) did not give rise to much optimism with Poul Nyrup Rasmussen (PES, Denmark) who felt such figures do not deserve to be described as economic recovery. The president of the Party of European Socialists called on Mr Almunia to raise the question of better coordination, especially of public investment, at the next Ecofin Council. Growth rates naturally remain weak, Mr Almunia admitted, speaking of recovery in comparison to the even weaker figures foreseen early in the year. Stressing how difficult it is to act together to increase employment and productivity rates through public or private investment, he pointed out: “I should like Ecofin to be able to use coordination possibilities”. He went on to hope that the European dimension will also be used through an agreement on financial perspectives from the European Council in December. In answer to questions put by the chair of the parliamentary committee, French Socialist Pervenche Berès, on the subject of guidelines relating to the improved functioning of the euro zone, the Commissioner recalled that the challenge faced was that of adapting adjustment mechanisms to the euro zone in order to avoid making the existing gaps between Member States even bigger in the event of external shocks. Gunnar Hôkmark (EPP-ED, Sweden) admits that he does not know whether public investment is a solution for Europe and would rather urge for changes in corporate investment.
Dutch Socialist Ieke Van den Burg questioned the Commissioner on the likelihood of interest rates rising. “I am not at all keen on speaking on the matter in public”, he said, thus avoiding having to answer similar questions. Addressing the German Liberal, Wolf Klinz, who asked him about structural reforms in Germany and commitments of the major coalition, Mr Almunia said that the fact that budgetary consolidation appears as the first point on his programme is in itself a “good sign”. He went on to explain that a political decision with the support of the two main parties is a positive element for restoring investor confidence in Germany. Concerned about the possibility that the new Member States will defer adoption of the common currency (for example, in the event of a no-vote at a referendum), Mr Klinz received a clear answer on how appropriate such an approach was. ”Given experience so far, I would recommend that no-one hold a referendum, and especially not on the euro”, said Mr Almunia, who considers that these countries and their populations “joined the EU in full knowledge of the facts”. On the other hand, good citizen information is of prime importance to prepare transition to single currency and avoid the repetition of abuse, as it is “wrong” to say that the euro brings more inflation. The Commission will present an assessment mid 2006 on the basis of which it will make a proposal to Council in order to enlarge the euro zone. Three countries hope to join the euro zone from January 2007: - Lithuania, Estonia and Slovenia. In answer to a last battery of questions, Mr Almunia said, on the subject of structural reforms, that “We are on the right track but if we do not do more we shall not go very far”.