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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Noel de Leon who wrote (116822)	10/14/2003 5:29:54 PM
From: Neocon	Read Replies (1) \| Respond to of 281500

The Eurozone is the area which uses the Euro.

To: Noel de Leon who wrote (116822)	10/14/2003 5:32:46 PM
From: Neocon	Respond to of 281500

Eurozone brink of recession From correspondents in Brussels EUROPE'S beleaguered economy is teetering on the edge of recession, data confirmed today, but officials forecast that the 12-member eurozone will pull back from the brink over the next few months. The European Commission, which is battling to persuade key eurozone countries to keep to strict budget rules amid the slowdown, described the worse-than-previously forecast figures as "disappointing". The new figures "confirm that growth in the first half of this year has been disappointing," acknowledged Gerassimos Thomas, spokesman for EU monetary affairs commissioner Pedro Solbes. According to the EU's Eurostat data agency, GDP in the zone which shares Europe's single currency contracted by 0.1 per cent in the second quarter, after stagnating in the first quarter. The figures – including a downwards revision of first-quarter growth from 0.1 per cent to zero – put the bloc dangerously close to a technical recession, defined as two consecutive quarters of negative growth. But the Commission, the EU's executive arm, forecast that growth will pick up in the third and fourth quarters, predicting GDP growth of 0-0.4 per cent and 0.2-0.6 per cent respectively. "The acceleration in growth predicted for the fourth quarter stems from the recent improvement in domestic retail confidence, as well as external factors," said the EU executive in a statement. The gloomy data came as Brussels was again forced onto the back foot over the eurozone's embattled Stability and Growth Pact, which sets the rules underpinning the single currency. Brussels is struggling to bring its influence to bear on EU heavyweights France and Germany, who are both at risk of breaching the 1997 pact's strict rules for a third year running in 2004. Under the pact, eurozone members must keep their public deficits below 3 per cent of GDP. France in particular is heading for a head-on collission with Brussels, as it presses aheads with tax cutting plans which could see its deficit rise to 4 per cent of GDP next year. The commission is facing a severe test of its credibility as it works out how to persuade Paris and others to toe the budget pact line. In the latest intervention, Commission head Romano Prodi called Monday for the pact's rules to be applied "intelligently" – a description understood by some as suggesting a certain flexibility in interpreting the pact's rules. But the commission spokesman slapped down that idea on Tuesday, saying flexibility was one thing but rules were rules. "Intelligent and flexible interpretation .. does not mean that you do not apply the rules of the treaty," said the spokesman for Solbes. Agence France-Presse finance.news.com.au