Big Fall in EU Economic Growth

The European Commission yesterday reported a sharp downturn in economic growth in the European Union, but insisted that a significant number of its 25 members could still hope for a better future.

The Commission has slashed its growth projections for the this year by more than I percentage point to 1.5 percent. It projects future growth of 2.4 per cent, or half a percentage point down on its previous estimate, due to general world slump.

But Mr Yves-Thibault de Silguy, the monetary affairs commissioner, insisted that this gloomy outlook did not dent prospects for establishing a single currency. "We consider it realistic, even certain he said.

Although the growth projections are viewed as realistic by financial analysts, the budget deficit projections were yesterday regarded with scepticism by both economists and some diplomats.

After presenting the economic forecast, Mr de Silguy described the documents as a " two-toned report – grey for growth for now, but rosy – for economic convergence in future."

Mr de Silguy said Germany, France, the Netherlands and Finland were expected to join Denmark, Ireland and Luxembourg in successfully cutting their budget deficits below 3 percent of GDP.

Austria and Sweden were expected to come very close, while Belgium, Spain, Portugal and the UK could be within 3/4 of a percentage point of the benchmark.

The German chancellor, who visited the Commission shortly before the report was issued, said he opposed any relaxation of criteria – covering debt, deficits, inflation, and exchange rate stability.

"I'm strongly against changing the convergence criteria," he said. "Without these strict yardsticks, the efforts at economic consolidation will not be successful." However, the chancellor stopped well short of endorsing the Commission's optimistic forecast that a significant number of countries would reach or nearly reach the requirement of a public deficit below 3 per cent of GDP.

"When we take the decision, it should be done at the right time and within the rules of the treaty," he said, referring to the 1998 decision on who should join EU. The Commission's economic policy guidelines, while calling for a social dialogue with the trade unions, also warned that EU could be threatened if its members gave in to social pressures.

"If progress towards sounder public finances and structural reform were to be hampered by rising social and political resistance, this... might add to doubts among some observers as to whether a sufficient number of member states would be ready bor this at the starting date," he said.

"Financial Times"

Комментарии to qualify for = to meet requirements; to slash = to cut reduce;

dent = зд. affect, diminish (a dent in the market = a niche);

projection = forecast, estimate;

benchmark = level;

relaxation = softening;

convergence = зд. membership;

yardstick = criterion (pl criteria);

stopped well short of endorsing = did not approve of; to fall short

of – не дотягивать до, не соответствовать;

public deficit = budget deficit (ср. public sector = state sector);

to gave in to – уступить;

sounder = healthier.

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