EU leaders dismiss speculation over euro
Luxembourg’s prime minister today dismissed any possibility individual countries might abandon the euro and called on EU leaders to show the world the 25-nation bloc is still functioning despite the apparent demise of its proposed constitution.
“It is just inconceivable that a country could envisage dropping out of the euro. The euro belongs to us all,” Jean-Claude Juncker, whose country holds the rotating EU presidency, said on the second day of EU finance ministers’ talks.
Some Italian officials have called for a return of the lira, criticising the European Central Bank’s one-size-fits-all interest rate policy and blaming the euro for higher prices. The issue has stimulated some discussion but has been ruled out by most officials.
While acknowledging that “the current state of the European Union does not inspire much confidence”, Juncker urged European leaders to challenge the notion there is a crisis now Britain has postponed its referendum on the treaty, following last week’s rejection of the constitution by French and Dutch voters.
“The EU leaders should use the next few weeks to show they are capable of taking decisions,” said Juncker,
Yesterday’s meeting focused on the economic outlook for the euro-zone, which is made up of 12 EU countries. Juncker said first quarter growth in Germany and Spain of about one percent pointed to a reversal of fortunes for the lacklustre European economy.
European Union leaders will hold a June 16-17 summit to discuss the budget for the 2007-2013 period, but the talks will also focus heavily on the beleaguered constitution.
Juncker said he hoped a budget agreement would be reached to show that “Europe still works and is capable of taking decisions for the medium term”.
German Finance Minister Hans Eichel echoed Juncker’s view it was imperative for EU leaders to craft a 2007-2013 funding deal next week.
“Germany has signalled it is ready to move, but that does not change our basic view” that annual spending cannot exceed 1% of the EU’s gross national income, Eichel said.
Five other countries – Britain, France, the Netherlands, Sweden and Austria - agree with Germany while eastern European nations and Spain want a much higher spending cap.
High deficits are also threatening the euro. Currently, 11 of the 25 EU governments have budget deficits exceeding 3% of GDP – the threshold the EU set for those that use the euro.
