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ECOFIN cuts 2005 growth forecast for euro zone to 1.3%

ECOFIN cuts 2005 growth forecast for euro zone to 1.3%
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Europe’s finance ministers have been meeting under their new chairman, Britain’s Gordon Brown, to discuss deficits and growth prospects. They have cut their forecast for economic growth in the euro zone this year to 1.3% from 1.6% mostly due to record world oil prices. But EU Economic and Monetary Affairs Commissioner Joaquin Almunia was upbeat as he said: “There were some doubts and risks, some of those risks are materialising as the oil prices are rising, but we will wait, because on the other hand we have some good news and some indicators in the last weeks, so maybe the second part of this year will be better than the first one.”

The range of predictions for 2005 economic growth for the euro zone runs from 1.6% from the International Monetary Fund and the European Commission to as low as 1.2% from the Organisation for Economic Cooperations and development. Chairing his first meeting, Gordon Brown talked tough. He said the EU has to accept it is “now faced by global challenges from which there is no shelter” rather than thinking merely in pan-European terms as it has in the past. Brown started his statement by saying: “Today was the first council meeting under the UK presidency. The meeting considered, in particular, key elements of economic reform, building of the reform of the stability pact, completing the single market through our commitment to long term structural reform founded on greater flexibity. The council considered the need to set time-tables for further market liberalisation, a more independent competition policy and the reform of state aids.” Brown also said the EU has to become more outward-looking “to achieve the growth that is necessary if full employment is not to be a dream in the distant future”. Unemployment is at 10% in France and Germany, that is double the level in Britain.