The creation of the euro has brought economic stability to Europe but has yet to spark growth, as euro zone governments have failed to implement reforms, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said today.
'Overall, European economic and monetary union has succeeded in delivering macroeconomic stability but it has not yet delivered economic dynamism,' Almunia told a conference on the euro. 'This is not due to failures of macroeconomic policy but rather to the fact that, despite progress in structural reform, European product and labour markets are still not sufficiently flexible'.
He cited in particular the failure of certain euro zone governments to respect agreed-upon budget and public deficit limits and difficulties in coordinating economic policy.
While there had been 'a plethora of goals sets at European level,' notably at a European Union summit in Lisbon 2000, there had been 'weak implementation and delivery at national level.'
The Lisbon summit called for measures to make the European Union the world's most competitive economic area by 2010. But goals adopted in the Portuguese capital now seem unlikely to be met in the face of repeated delays, he said.
Almunia also told the conference that the current level of the single European currency, used in 12 EU countries, against the dollar was not a problem and that volitility on foreign exchange markets was on the decline.
He said the value of the euro was no longer as great a concern as it was last year, when the single currency was rising sharply. 'Instead, the focus has now shifted towards the likely impact of high oil prices on global growth and inflation,' he said.
'We share the prevailing view that the recovery in the euro area and the global economy remains on course, and we do not see the current value of the euro as presenting a problem in this respect'.
But he stressed that if the surge in oil prices had given rise to considerable risks of second-round effects, 'these have not materialised to any significant extent.'
The European Central Bank had managed to anchor inflation expectations successfully, he maintained, noting that inflation index-linked bonds had been mostly below 2% since the launch of the euro in cash form in January 2002.
