Finance ministers hold first meeting of euro club members

EU finance ministers from the 11 states participating in the launch of the euro, including the Minister for Finance, Mr McCreevy, met last night for the first time since their membership was finalised. The launch of the controversial Euro-11 committee, which will co-ordinate the economic policies of the euro area, took place in Senningen castle outside Luxembourg city under the chairmanship of the Austrian Finance Minister, Mr Rudolf Edlinger.

While the agenda was light, there was huge media interest in the meeting, seen as a future engine of EU economic policy. The real meat of the meeting was a report from the Economic Affairs Commissioner, Mr Yves Thibault de Silguy, on the improved growth performance of the major EU economies. Mr de Silguy is understood to have told ministers that, while the Commission's autumn forecasts for the aggregate deficit of the 15 would be around 2 per cent for 1998, improved growth should reduce that to 1.5 per cent.

Mr de Silguy warned, however, that member-states should see the opportunity as one to intensify the convergence process, reducing national debt, rather than one to relax the tight fiscal policies that had brought them so far.

The discussion between ministers is understood to have focused on the macroeconomic context of their 1999 budgets, with next month's meeting likely to hone in in greater detail on individual budget plans. It is then that the Minister for Finance, Mr McCreevy, will come under pressure to give assurances that he will not cut taxes.

Earlier ministers had discussed progress towards the launch of the euro, praising the success of the British presidency despite its non-involvement in the currency. They agreed that, at their September meeting the president of the European Central Bank, Mr Wim Duisenberg, would be invited to attend as well as the four non-euro states. The discussion is likely to focus on the thorny issue of how the EU and the euro area should be represented at meetings of international multi-lateral financial institutions.

The Euro-11 was established by the Luxembourg summit as an informal sub-committee of the finance council, Ecofin, where the 11 could discuss mutual problems. In theory, it cannot take decisions itself but must refer all matters to Ecofin; when issues involving all 15 states arise, the others are allowed to attend and participate.