Leaders confident Europe can withstand US economic slowdown

EU leaders sought yesterday to dampen speculation that the slowdown in the US economy could wreck the recovery of Europe's economy.

At a summit in Stockholm aimed at improving competitiveness in the EU, the 15 leaders agreed that Europe was in a strong position to withstand the impact of a US downturn.

The Taoiseach, Mr Ahern, said he was surprised by how upbeat the mood was among his fellow leaders and said there was no gloom about economic prospects.

"The main emphasis was on the fact that the economic outlook in Europe is still good. There should be nobody talking it down. Europe has the potential to perform well throughout the decade," he said.

The EU leaders expressed their determination to push forward the process of liberalisation in Europe's economy. But it appears unlikely that they will overcome key differences on the pace of liberalisation before the summit ends today.

Commission sources suggest the leaders will fail to set a deadline for the liberalisation of gas and energy markets throughout the EU.

However, it is confident that the summit will trigger a mechanism whereby the issue will be decided by qualified majority voting following a Commission recommendation.

France is resisting the setting of an early deadline for the liberalisation of its energy market on the grounds that more time is needed to ensure that consumers' interests are protected.

The French Finance Minister, Mr Laurent Fabius, said France did not want to see "deregulation for deregulation's sake" but wanted to ensure that any further liberalisation would not come at the expense of the cost or quality of services to consumers.

Plans to create a "single European sky" - a centralised air traffic control system - will be held up by the dispute between Britain and Spain over the status of Gibraltar.

Officials suggest that another key issue, the creation of a single European patent, could also be postponed because of differences over the details of the plan.

The summit scored one success early yesterday when EU finance ministers agreed new regulations for an internal market in financial services. The Taoiseach welcomed the agreement on an issue he identified as a priority for Ireland.

"It's a vital step towards making Europe more competitive and on a level with the US," he said.

The argument over financial services regulation may not yet be over, however, and the European Parliament indicated yesterday that it would press for changes to the deal agreed in Stockholm.

"It does not yet fully provide the safeguards which the European Parliament is seeking, as regards democratic oversight and transparency, in the interest of consumers, investors and market practitioners," the Parliament said in a statement.

Despite the deadlock on several key issues, the EU leaders are likely to agree a range of reforms today, including measures to encourage more women to enter the workforce.

The EU also wants older workers to stay in employment for longer to counteract the ageing of Europe's population that threatens to bankrupt pension systems in some EU member-states.

The Taoiseach expressed satisfaction that Ireland's EU partners were discussing economic and social issues together and suggested Ireland's social partnership could serve as an example to other member-states.