Euro economies grow faster than expected
by Aoife White, AP Business Writer

The Associated Press    Translate This Article
11 July 2006

BRUSSELS, Belgium (AP) - The 12 economies that use the euro are expanding faster than previous forecasts, but not all are taking heed of the EU's warning of making hay while the sun shines, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said Monday.

If economic indicators continue to signal strong growth, the EU head office will in September upgrade its 2.1 percent forecast of growth for this year, he said.

``The situation from an economic point of view is improving, but the efforts for the fiscal consolidation ... in most of the member states of the euro area ... are not improving,'' he said, urging governments to use the current upswing to put their budgetary affairs in order, especially since most face the heavy burden of an aging population.

While countries that have broken EU budget rules—Portugal, France, Germany and Greece—are working hard to improve their situation, others have become complacent and must do more to stop slipping into bad habits.

Luxembourg Prime Minister Jean-Claude Juncker—who led the talks between euro-zone ministers on Monday—described Austria, Belgium and Luxembourg as ``not yet good children'' who needed to do more while he told two of the euro area's fastest growing economies—Spain and Ireland—as well as Finland to take care not to lose their way.

Almunia congratulated Italy's ``good intentions'' to cut its public debt to 2.8 percent of gross domestic product in 2007 from the 4.0 percent forecast for this year, but said he would watch carefully how Rome planned to do this.

Italy has said it would cut spending on health and pensions and may slash government jobs. It will adopt its budget for next year in September.

``We need to pay more attention to the concrete measures that will be included in the budget for 2007,'' Almunia said. ``In the coming months we will monitor and continue to make public our assessment of the Italian efforts.''

On Tuesday, finance ministers from all 25 member states will look at Portugal's efforts to wrangle its budget deficit under the 3 percent set by euro rules.

Copyright © 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Global Good News comment

Global Good News acknowledges that the financial report includes a clear point about the lack of improvement so far in efforts for fiscal consolidation. However, the report of economic growth is still seen as a positive trend.



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