ECONOMY : * - SLOVENIA, THE EURO'S NEW FLAG-BEARER.

A flourishing Slovenia did not need to wait to take over the Presidency of the European Union Council to make its name in history. The first of the enlargement countries to enter the eurozone on 1 January 2007, the Balkans' own 'little Switzerland' has already signalled the start of significant growth of the eurozone. Despite a few somewhat hasty announcements from certain governments, all the enlargement countries are planning to adopt the single currency - when the time is right, as stipulated in the accession treaties.

The rejection of Lithuania's premature candidacy has also demonstrated that not only the members of the eurozone but also, and above all, the European Commission and the European Central Bank, intend to apply the accession criteria rigidly.

The green light finally given to Slovenia sent a very clear signal to sceptics of all persuasions who for months had been predicting the inevitable demise of the single currency (Cyprus and Malta's entry on 1 January 2008 confirms this trend, even if the impact of their accession remains limited.)

Temporary inflationary overheating

But a year after abandoning its national currency, Slovenia is still not out of the woods. Firstly, the country will now serve as an example for all candidates to the eurozone. Secondly, the unfortunate inflationary overheating experienced in 2007 (inflation was in the region of 6% in October 2007 compared with 1.5% in October 2006) is likely to cast a shadow over further enlargement of the eurozone, particularly Slovakia's entry, currently scheduled for 2009.

This overheating is undoubtedly only temporary (see the interview with the Slovenian minister for foreign affairs). But it is considered by certain Commission experts as "a bad example," even if its origin is largely due to the internal shockwaves (which have impacted on the whole eurozone over these last few months from a sharp rise in oil prices and an increase in the price of agricultural materials). All the same, the changing prices are also due to internal factors stemming from the lack of competition in the distribution sector, as mentioned on numerous occasions by Joaquin Almunia, the economic and monetary affairs commissioner.

In addition, Ljubljana will have two other serious and more dangerous challenges to face: an ageing population's impact on the sustainability of its public finances and the competitiveness of its economy in the light of the new Lisbon Agenda. In the short term, Slovenia...