In spite of the upbeat messages that came out of the last Ecofin Council at the end of March on the state of health of EU finances, the European Commissioner for the economy Pedro Solbes de Mira recently declared that the prospects for the economy of the EU countries in the short term “are not very favourable”. Solbes shares the four priorities for economic reforms identified by the spring Summit (innovation and entrepreneurship, reinforcement of the internal market, growth of employment and social cohesion, protection of the environment geared to growth of employment). But he adds that “the margins for optimism remain limited, given that the economic growth registered in the fourth quarter of 2002 is equivalent to 0.2% of GDP, less than half that of the previous quarter”. On the question of a possible revision of the Growth and Stability Pact, the EU’s economics Commissioner expressed the view that, if on the one hand the indicators of Eurostat (the EU’s statistics agency) “paint a gloomy picture of activity in the Euro Zone, with a drop in confidence both of consumers and businesses”, on the other the war in Iraq and the global economic and financial situation “represent an exceptional circumstance, but not to the point of forming an exception to the obligation for member states to maintain their deficit/GDP ratio below the threshold of 3%”. The new estimates for economic growth in the EU mean that the forecast for 2003 has been almost halved: “the 1.8% forecast in November 2002 is likely to drop to an estimated 1% growth this year”.
