Brussels, 14/02/2006 (Agence Europe) - Despite disappointing results for the fourth quarter 2005, euro zone growth prospects remain quite satisfactory in 2006, Jean-Claud Juncker and Joaquim Almunia pointed out when speaking to the press on Tuesday. The end of 2005 will remain “below forecasts and expectations but this does not detract from the fact that growth recovery is confirmed and becoming stronger”, the Luxembourg joint prime minister/finance minister said on Monday evening after the Eurogroup meeting under his chairmanship. The debate on the economic situation of the euro zone was “useful”, he said, noting that the employment situation is improving. “Despite our efforts, we are unable to see a second round effect”, he said. Such a conclusion is also true for wage moderation, which still prevails as ministers reminded the president of the European Central Bank (ECB), Jean-Claude Trichet, during a long exchange of views, Mr Juncker said. He went on to admit: - “We have no doubt felt that the ECB will take a responsible monetary policy decision, probably in line with market expectations and that it will have the possible repercussion on growth in mind”. Slyly confessing that he was “doing a course” to become foreign minister, Mr Juncker also answered, when pressed by reporters, about the possibility of a further increase in interest rates in the euro zone, asserting: “If the ECB takes a responsible decision, and I am convinced it will, then it will not have a (negative) impact on growth in Europe”. Joaquim Almunia, Commissioner for Economic and Monetary Affairs, believes the Commission's autumn forecasts were “correct” (growth of 1.3% in 2005 and 1.9% in 2006) and may be maintained (EUROPE 9070). Before publishing the updated intermediary forecasts for the first time, Mr Almunia considered that certain indicators of real activity reaching him on end 2005 and early 2006 are “sometimes positive” but are nonetheless “not particularly reassuring”. They are mainly poll surveys, which heartens the twelve finance ministers, the Commissioner said, noting that such “very positive” results marked “a rise in confidence at a level not known for five years”. Mr Juncker went on to add: “We are not very pleased for the fourth quarter 2005 but we have not revealed any elements that could say whether there will be deceleration in 2006”. Despite the risks involved (oil prices, global imbalance), one can therefore keep “cautious optimism”, Mr Almunia concluded.
Scrutinising the stability programmes of three euro zone countries, the ministers noted the Commission's remarks (EUROPE 9122). Belgium has a plan that “has style” with a medium-term aid that is more ambitious than the criteria of the Stability and Growth Pact and a debt that is diminishing, Mr Juncker said. If the Austrian case does not call for “any particular objections”, Luxembourg, the “former virtuous country” has a “very real need for collective adjustment, which, I am told, the Luxembourg government is very keen on”, the prime minister said. The Commission will examine the programmes of the last Member States on 22 February, except that of Germany, that the government should adopt the same day. It will then take two decisions concerning Germany, the first and “probably the swiftest” will concern the follow-up to the procedure, Mr Almunia recalled. He did not, however, specify whether he plans to suggest using Article 104§8 and 9, and what time will be allowed for Berlin to bring its budgetary deficit below 3%.
Reviewing the conclusions of the Commission's report on the impact of population ageing on public finance and growth, Mr Juncker broadly subscribed to the statement made (EUROPE 9130). Stressing that important efforts will be necessary, the Eurogroup president noted that “medium and long term results continue to improve” in euro zone countries that have introduced reforms, mainly in their pension systems (Austria, France and German).
Anticipating the decision that was to be endorsed by 25 on Tuesday, the president of the Eurogroup confirmed that the euro zone ministers had chosen to designate Jürgen Starck “unanimously” to take the post of Bundesbank vice-president to replace Otmar Issing at the European Central Bank (ECB) Executive Board. “He is the man that is needed for the post”, Jean-Claude Juncker said, recalling the activity deployed by Mr Starck “in our circles for many years now”. (Ed.: Mr Starck was also Secretary of State for Finance).
In answer to the question “Are there therefore permanent seats for the large euro zone Member States within the ECB Executive Baord?” Mr Juncker replied in the negative. The fact is, however, that the new reshuffling once more entails replacement of one of the six members of the Executive Board by a compatriot, after José Manuel Gonzalez-Paramo, who had replaced Eugenio Domingo in 2004, and Lorenzo Bini-Smaghi, who succeeded Tommaso Padoa-Schioppa in 2005.