FINANCE COUNCIL: MINISTERS EXPECT ONLY LIMITED AND TEMPORARY SLOWDOWN IN GROWTH.

Summary:Economic and Monetary Affairs Commissioner Yves-Thibault de Silguy emerged from the Finance Council meeting in Brussels on February 8 insisting there is no crisis in European growth. Both the Euro Council (informal Council of Ministers from the eleven countries participating in the single currency) and the full Council agreed that the slowdown in growth will be temporary and does not signal a general downturn in the economic situation. On the international front, the President-in-Office of the Council, Germany's Finance Minister Oskar Lafontaine, highlighted the United States' reluctance to accept the agreement secured at the Vienna European Council in December 1998 on the external representation of the Euro. Germany, which also holds the Presidency of the G-7 (Group of Seven most industrialised nations), will seek to bring Washington and Tokyo round to the Union's proposal at the next G-7 Finance meeting in Bonn on February 20.

Following the Euro Council's debate on economic policy coordination, Oskar Lafontaine recognised that no expansionist impact should be expected from budgetary policy. He indicated that the reorganisation of budgetary policy remains on track. The German Finance Minister also underlined the positive contribution of wage policy to the evolution of inflation. His French colleague, Dominique Strauss-Kahn, indicated that the Council broadly subscribes to the notion that the slowdown in growth, though only temporary, must be taken into account in the implementation of economic policy. Commissioner de Silguy also confirmed a "limited and temporary" slowdown in the economic situation. While advocating vigilance, he insisted there is no reason for pessimism as consumer confidence indicators remain very high, interest rates are at historically low levels and the Euro is not overvalued.

External representation of the Euro zone.

The German Presidency also reported back to the Ministers on the United States' apparent unwillingness to accept the agreement reached at the Vienna European Council on the external representation of the Euro zone within international bodies. Spain's Economic Affairs Minister, Rodrigo Rato, called for complete and comprehensive application of this agreement. Should this fail to be the case, Spain would challenge the participation of the European Central Bank within the G-7. The Spanish demand received the support of all Euro countries not members of the G-7 (France, Italy and Germany...