Concern for euro zone economy

The general economic state of the 12-country euro zone is a cause for serious concern, the current head of Ecofin has said.

Speaking after an informal meeting of EU finance ministers, Luxembourg's Jean-Claude Juncker, who currently chairs the council of ministers, said "we are seriously concerned by the general situation".

His comments were qualified by EU monetary affairs commissioner Joaquin Almunia who said "we talked about some good news and some less good news".

The more optimistic news is about Germany, the euro zones's largest economy, which expanded by 1 per cent during the first quarter of the year.

Italy, on the other hand, has entered a technical recession - defined as two successive quarters of negative growth - while the Dutch economy is also in trouble.

"To tell you the truth," said Mr Almunia referring to Italy, "we were expecting better figures - less gloomy.

"We weren't expecting Italy to recover very fast but we weren't expecting such negative results for the first quarter of 2005."

Mr Juncker indicated that while disparities in certain areas of the economy such as inflation were not of concern, others, such as the differences in economic output between the various countries, were "seriously worrying".

"We are aware of the fact that in the future we'll have to give greater attention to divergences emerging in the euro zone".

However, he urged that the pace of structural reforms should be maintained.

The commission will do its bit by sending missions to each of the 25 member states to advise them on their preparations for their national reform programmes, which are part of the EU's overall economic goal known as the Lisbon agenda.

Ministers also discussed changing the "common" face of the euro coins. At the moment they just contain a map with 15 old member states.

In the future, the map will be extended to include the 10 new member states which are obliged to join the euro zone.

The commission will submit a proposal on this issue at the next meeting of EU finance ministers next month.