Brussels, 13/11/2007 (Agence Europe) - Speaking on Monday 12 November after the Eurogroup meeting he had been chairing (a regular meeting of eurozone finance ministers), Jean-Claude Juncker said the Eurogroup fully shared the European Commission's economic forecasts published on Friday (see EUROPE 9540) apart from some local nuances. He told reporters there would be a slight slowdown in growth in the eurozone next year, as forecast by the Commission (from 2.6% in 2007 to 2.2% in 2008). This slowdown is attributed to the turbulence on the financial markets, the scale and impact of which are not yet clear, and which has come on top of major concerns like the hike in oil and commodity prices, including food. Faced with the recent record high oil prices, which Juncker said were of concern to the ministers and were not designed to feed into economic growth, the eurozone finance ministers referred back to their September 2005 Manchester statement (see EUROPE 9025) calling for any fiscal distortions of competition to be avoided. Juncker said that there was clearly a lack of transparency about oil prices and considerable speculation was involved in price setting.
He stated that in terms of the budget, there had been a sharp improvement in public finance in the eurozone in 2006 and 2007, but he regretted that not all countries had learned lessons from the bad experiences of the past. If the Commission's forecasts materialise, then Italy and Portugal will have their excess deficit proceedings repealed in the spring of 2008, but a slowing structural adjustment is looming for the eurozone as a whole in 2008. All member states are expected to meet their medium-term targets by 2010, warned Juncker, adding that the targets had not changed and remained in place.
Some ministers are more optimistic than the Commission, said EU Economic and Financial Affairs Commissioner Joaquin Almunia. Rather than registering a deficit, as predicted by the Commission, Cyprus expects a significant surplus, he added. Comparing the forecasts for 2008 and 2009 with the medium-term targets (MTT), he said that three groups of countries emerged. The top pupils meet or exceed their MTT (Ireland, Spain, Luxembourg, the Netherlands, Finland and Germany). Others nearly reach their MTT (Cyprus, Austria, Slovenia and Belgium) but a third group lags behind (Portugal, Malta, Italy, France and Greece).
Greece is the only country seen as failing, having to make a 0.5% adjustment to GNP in 2008, as foreseen in its commitments under the Stability and Growth Pact (SGP). Describing the European Commission's forecasts as too gloomy, both in terms of growth (2% in 2008) and deficit (2.6% of GNP in 2008), French Finance Minister Christine Lagarde said she expected positive growth figures for France in the third quarter, above the 0.7% forecast by the Commission. (A.B.)