European Commission President Mr Romano Prodi and French Prime Minister Mr Jean-Pierre Raffarin said yesterday they were concerned that the euro's recent sharp rise against the dollar was harmful to the European economy.
At a joint news conference after talks at EU headquarters, Mr Prodi said they had discussed currencies and he fully shared Mr Raffarin's call for leading world finance ministers to seek ways to make the exchange rate more compatible with economic reality.
"I share the statement of the prime minister on the euro completely, because such strong variations of the euro are not positive for our economy, and we hope there will be a more stable monetary perspective in future," Mr Prodi said.
Yesterday the dollar strengthened a little against the euro, closing at €1.2683, in European trade, compared to €1.2768 the previous day.
Mr Raffarin said: "We both want the parities to be as close as possible to economic reality. The rapidity of these movements on currency markets is worrying because they are diverging from economic reality."
The French prime minister called for the EU's budget deficit rules to be adapted in future to encourage greater investment in research and development in Europe, citing France's bid to host a global nuclear fusion reactor project as an example.
He said the Stability and Growth Pact should take account of longer-term structural reforms such as France's efforts to make its pensions and health insurance systems more sustainable.
Mr Raffarin avoided direct criticism of the EU executive's decision to appeal to the European Court of Justice to annul a decision by finance ministers to allow France and Germany to escape disciplinary action over their deficits. He said France believed last November's decision last November was legitimate and was relaxed about the court's verdict.
His comments came a day after the Commission decided to mount a legal challenge to the ministers' decision to suspend EU budget rules for the euro zone's two biggest economies, which have repeatedly broken the bloc's deficit limits.
Many EU governments have criticised the Commission decision, and French Labour Minister Mr Francois Fillon earlier joined the chorus. However, Spain and the Netherlands backed Brussels. - (Reuters)
