European finance ministers today called for budget discipline and vigilance on inflation.
Europe remains fixated on deficit-cutting rules and curbing price rises, but US President George W. Bush is set to sign into law tomorrow a $152 billion rescue package full of tax rebates and business incentives to revive a flagging economy.
That divergence set the tone for today's meeting of ministers from the 27 European Union nations, many of which could be vulnerable if what is feared to be an unfolding US recession spreads.
German Finance Minister Peer Steinbrueck spelled out the twin pillars of budget discipline and inflation-fighting, saying: "Germany has long been the locomotive making a disproportionate contribution to keeping down inflation in Europe. Others are also obliged to do so."
Ministers voiced concern about inflationary pressure from food and energy prices despite the European Central Bank's shift last week to a more neutral monetary policy, setting the stage for possible rate cuts this year from the current 4 per cent.
Progress towards leaner budgets within the major euro zone economies has been uneven since last April, when finance ministers agreed to take advantage of boom times and balance their books by 2010.
The European Union executive called on the bloc's governments today to account better for the way they spend EU funds, making a veiled threat to withhold payments from its massive regional aid budget.
EU governments currently provide the European Commission with only limited accounting evidence of how they spend regional aid funds, which make up one-third of the 27-nation bloc's €120 billion annual budget.
This lack of transparency and proper audits has led the EU's budget watchdog, the European Court of Auditors, to refuse a clean bill of health to the bloc's budget for 13 years in a row, giving powerful arguments to opponents of EU integration.
Pressed by the Commission, EU governments agreed last year to provide clearer evidence of how the funds are spent. But Commissioner for Administrative Affairs Siim Kallas told the bloc's finance ministers on Tuesday he had not been satisfied.
"We have made it absolutely clear what we expect to receive by the 15th February, on Friday. We expect to receive the annual summaries of audits and declarations covering all structural action payments from the EU budget," he told the ministers.