Brussels, 13/07/2006 (Agence Europe) - On Wednesday when speaking before the European Parliament's Committee on Economic and Monetary Affairs, Commissioner Joaquin Almunia presented the communication adopted by the Commission that same day on the eurozone economy. The first of its kind, the communication relating specifically to Member States that have adopted single currency is accompanied by a report describing the main challenges facing those countries. The Commissioner responsible for economic and monetary affairs hoped that the document would be adopted each year at this time of the year in order to better discuss the special problems of monetary Union and of its 310 million citizens. “The euro brings us far more advantages than disadvantages”, Mr Almunia stressed. Some worrying elements have appeared recently (weak growth and productivity rate, unemployment rate above that of other industrial regions, lack of flexibility for ensuring a dynamic reaction to changes linked to globalisation, etc.), the Commission said, hoping that, with a more sustainable recovery, these difficulties will be overcome. Generally speaking, however, there are still many challenges to be raised.
The report identifies three main challenges. Firstly, the eurozone economy should have greater growth potential. “Our potential, including in the recovery phase, does not exceed the 2% mark by very much”, the Commissioner deplored, telling the Eurogroup on Monday that the Commission's growth forecasts for 2006, which currently stand at 2.1%, could finally be higher. “We know the main reforms necessary - they are those of the revised Lisbon Strategy”, he warned. It is then necessary for the internal market to be improved to ensure that all positive aspects liked to the introduction of the euro give concrete results. Although, in the eighties, the single market called for a single currency, the report sets out the problem the other way round calling for the internal market to be completed now that the euro is a reality. Finally, single currency must develop towards a single voice vis-à-vis other currencies in the world and the euro must be coherently represented outside the Union, Mr Almunia stressed. In a near future, multilateral consultation launched by the International Monetary Fund (IMF) to face up to the differences existing in the global economy would provide an opportunity to point to the road to follow. “We must have a common vision, or we shall be losers”, the Commissioner said.
In answer to questions by Alexander Radwan (EPP-ED, Germany), Mr Almunia returned to the stakes of budgetary improvements. The correct functioning of the euro zone is linked to that of the Stability and Growth Pact (SGP), he noted, judging that, one year after reform of the Pact, there is still much to be done for the preventive chapter. This is the most important challenge as economic recovery begins, the Commissioner said. In answer to Ieke Van den Burg (PES, NL), who was anxious to know more about the adjustment of budgetary timetables between Member States, Mr Almunia recalled that the Eurogroup would be examining the question during its meeting in October, for which the Commission is preparing its contribution. Mr Almunia then reassured Wolf Klinz (ALDe, Germany), who was worried about the independence of the European Central Bank after Commissioner and the President of the Eurogroup's letter to Jean-Claude Trichet, proposing regular meetings with the president of the ECB. Certain matters must be discussed. It is not a question of undermining the independence of monetary decision-making, and the letter in no way questions the independence of the ECB, Mr Almunia said.
In a press release, Donata Gottardi and Gianni Pittella (PES, Italy) welcome the choice of the European Commission to foresee an annual communication on the challenges specific to the euro zone. This initiative comes “just at a time when the European economy begins to show signs of recovery”, they comment, also welcoming the emphasis placed by Commissioner Almunia on the need for greater coordination in Member States' economic policies. With single currency, the two Italian MEPs say, it is possible to build unitary macroeconomic policies and an economic governance corresponding to the aim of “one currency, one economy”. Also, Ms Gottardi and Mr Pittella are taking a stance for a single seat for eurozone countries at the International Monetary Fund, stressing that the “euro may and must be an essential instrument in the EU's external relations: it is the second international currency and can influence international economic and monetary matters”.