Brussel waarschuwt voor nadelige effecten eurozone door langzame hervormingen (en)

EUOBSERVER / BRUSSELS - Structural reforms are needed not only for individual member states of the eurozone but for the area as a whole, as divergent economic growth and prices could lead to "tensions" that are harmful for monetary union, the European Commission has said in an economic report.

In its 2006 economic review paper focusing on the 12-strong euro area, published on Wednesday (22 November), the commission points out that several countries have still not managed to fully adapt to their participation in the monetary union.

Brussels has singled out Portugal and Italy as examples of member states losing out on competitiveness and growth as they did not in the past use the available instruments or a positive economic cycle to repair the budgetary deficit and improve their overall performance, as opposed to Spain and Ireland.

Speaking to MEPs on Wednesday, the chief of the eurogroup, Jean Claude Juncker, Luxembourg prime minister and finance minister, also warned about "a potential problem for cohesion" of the bloc if the different growth and inflation rates within the single currency union continue to rise rather than shrink.

EU economic and monetary affairs commissioner Joaquin Almunia admitted that for the countries facing problems due to low growth, the common monetary policy proved too expansionary but he rejected claims that the one-fits-all approach applied in the eurozone is to blame.

"By definition, the monetary union has only one monetary policy, this is not a matter for discussion," he said, adding that the countries should opt for structural reforms and healthy budgets rather than using the euro as a scapegoat for national economic problems.

"It is true that the way the impact of this monetary policy is received in member states is linked with their particular conditions," noted the commissioner.

"And we need to improve the way member states are going to adjust to this different impact to obtain the maximum benefit from being members of the monetary union."

Apart from national instruments to tackle the problem, Mr Almunia suggested that the eurozone countries could in future better co-ordinate their economic policies, including through special institutions rather than just at informal meetings of finance ministers.

He hinted he would advocate such a move as part of the reflection over the first 10 years of the eurozone, to be marked in 2009.

Concerning the latest calls by France for more political influence on the European Central Bank - and particularly its exchange rate decisions - Mr Almunia argued "I think the best thing we can do for the European Central Bank is to respect its independence."

But he noted that more efficient dialogue between all institutions governing the monetary union is also needed.