Brussels, 06/12/2005 (Agence Europe) - On Monday evening, the finance ministers of the eurozone said that the rise in euro interest rates decided on 1 December by the European Central Bank was a sign of ECB confidence in the strength of the recovery in the eurozone. Opposing the rise in rates, Eurogroup chair Jean-Claude Juncker avoided commenting before the media, but did say that the ECB rise would not imperil growth in 2006 (see Eure9p 90778 and 9080). Repeating public statements he made last Thursday, ECB President Jean-Claude Trichet told Eurogroup in Brussels on 5 December that the ECB had decided to start raising rates, explained Belgian finance minister, Didier Reynders, to reporters. This news was reported to be useful to ministers, who had been querying the ECB's strategy. Asked by reporters about how ECB statements on monetary issues would impact on the economy, Juncker said that he had simply asked the ECB to not taken any decisions without due consideration, which it had not done and would not do, even if Juncker had not made his request.
Eurogroup reached unanimous agreement on Monday evening that growth was beginning to pick up and despite discussion at the Eurogroup meeting of various risks that everybody knows about, the meeting felt that growth in Europe in 2006 would continue at a regular pace and would come close to its full potential, said Juncker. Juncker said Michael Depler, Europe Director at the international Monetary Fund, who had briefed Eurogroup on the IMF's interim report on the eurozone, had been moderately optimistic. The IMF said growth was on track. Juncker said that while the IMF says structural reforms in employment must continue, while welcoming that structural reforms to date had been more substantial than appeared at first sight. EU Economic and Monetary Affairs Commissioner Joaquin Almunia said the concrete outcome of structural reforms for growth and employment were starting to make themselves felt. He said he too believed the ECB's rate rise would not damage growth prospects. Almunia welcomed the IMF's positive views, particularly for 2007, following much pessimistic analysis in the recent past.
The European Commission's proceedings against Germany for excess budget deficit levels, initially planned for the end of this year, will not now be taken until next year. The assessment of countries with an excess deficit (France, Germany, Italy, Greece and Portugal) will be carried out from January onwards, said Almunia ahead of his meeting on Tuesday with German finance minister Peter Steinbruck. Steinbruck briefed Eurogroup on the general approach and detailed measures being taken by the German government to bring the country's budget deficit back below the required 3% in 2007. Eurogroup did not examine the proceedings to be launched, added Juncker. Almunia said that he expected the rules of the revised Stability and Growth Pact to be applied in a rigorous yet flexible manner.