Last week's cut in interest rates had to be seen as an opportunity to redouble EU member-states' commitment to economic reform and deficit reduction, the German Finance Minister and president of Ecofin said here last night.
Mr Hans Eichel was speaking after a debate between EU Finance Ministers on prospects for the European economy, in which serious concern emerged about the slowdown in some larger economies. Mr Eichel echoed the call of the acting EU Commissioner for Economic Affairs, Mr Yves Thibault de Silguy, to maintain fiscal discipline.
But a different message came from the French. They circulated a radical paper on economic co-ordination which argued for a reinterpretation of the strict rules of the Stability Pact to allow some countries greater leeway when their growth tails off.
This morning, ministers are expected to agree a one-off EU-wide bank holiday for December 31st to facilitate the millennium transition for the financial markets given possible disruption by the Y2K millennium computer bug.
With the Agenda 2000 negotiations disposed of, ministers at their informal meeting here returned to interrupted debates on ways to step up economic co-ordination. Last night they met as the euro-11 with non-euro members in attendance.
The former German finance minister, Mr Oskar Lafontaine, may no longer be here but there is still France's radical Mr Dominique Strauss-Kahn to stir things up by pushing yet further French demands for "economic governance". Effectively, this means the joint management by member-states of the European economy through multilateral monitoring and, increasingly, binding centrally agreed targets.
Mr Strauss-Kahn yesterday circulated a paper suggesting a five-point package of measures to tie the economies of the euro zone yet closer together. Building on the monitoring work of the euro-11 committee on annual budgets, he suggests strengthening its role by asking memberstates to submit multi-annual spending plans to enable broader co-ordination of fiscal policy.
"Public finance programmes should become fully-fledged co-ordination instruments," the paper argues. "They should set out rules for responding to economic slowdowns or overheating." Such measures to co-ordinate national policies should be matched, he argues, by regular debates on the aggregated fiscal situation in the euro area, "to ascertain whether overall fiscal policy objectives are appropriate".
French sources suggested that that could mean easing the pressure on countries such as Germany and Italy, faced with low growth, to balance their budgets by 2002. The idea is to see Stability Pact requirements applied, not to each euro state individually, but to the whole collectively.
And Mr Strauss-Kahn would like the Commission to provide finance ministers with reports on currency market developments, "which would make it possible to elaborate broad guidelines of exchange rate policies". This proposition smacks of interference in the independence of the European Central Bank and probably had some ministers choking over their dinner.
He had the same effect on Mr McCreevy in reiterating calls for "tax harmonisation", his insistence that the current voluntary code of conduct on corporate taxation "is a first step towards a set of minimum rules", and his wish to see the Union end national vetoes on such issues.
Mr McCreevy said he had yet to see the details of Mr Strauss-Kahn's proposals but had considerable doubts about any suggestion of diluting the Stability Pact, which, he said, had taken a long time to formulate.
