Finance ministers from the euro zone member-states yesterday reiterated publicly their conviction that the euro was undervalued and "does not reflect the strong economic fundamentals of the euro area".
In a communique read by the French Finance Minister, Mr Laurent Fabius, after a meeting of the so-called euro-group they emphasised they shared "the view that growth remains very robust in the euro area and that the fiscal consolidation and the reform effort, especially in the tax field, are well under way".
They were determined to continue the process, they said.
And, in what could only be interpreted as a sharp rebuke to the German Chancellor, Mr Gerhard Schroder, the ministers insisted "a strong euro is in the interest of the euro area". Mr Shroder recently controversially said that the weak euro was good for German exports but yesterday retracted his comments.
The Minister for Finance, Mr McCreevy, who made no bones about his belief that the value of a currency could not be talked up, nevertheless insisted it was a "fundamental law of economics" that markets would eventually reflect healthy fundamentals.
Asked about the possibility of intervention by the ECB to support the euro, Mr McCreevy said it was "always open to the ECB", echoing similar comments from ECB board member, Mr Christian Noyer, and Mr Fabius. The conservative Spanish Finance Minister, Mr Rodrigo Rato, took a slightly different tack in stressing that demand management was not a means of dealing with the fundamental problem of competitiveness with the US. EU growth and competitiveness were key and he insisted all member-states should by next year be running budget surpluses.
Mr McCreevy said the meeting of EU Finance Ministers would today issue a statement on the price of oil ahead of tomorrow's OPEC meeting. The inflationary problems in Ireland associated with the oil price increases had now hit Europe as a whole, he said.
Although sympathetic to Irish hauliers, he could not make budget commitments that favoured any one sector. "It is not possible to say we have more clout," he said, insisting that the problems of pensioners and those on low incomes would have to be considered.
He refused to be drawn on Budget warnings two days ago by the president of the ECB, Mr Wim Duisenberg, beyond saying he had the utmost respect for Mr Duisenberg and would consider his and other advice carefully.
Help for the euro yesterday was led by European Central Bank (ECB) council member, Ms Sirkka Hamalainen, who said: "We admit we're not happy with the development of the euro." The Luxembourg Prime Minister, Mr Jean-Claude Juncker, said on German radio that Mr Schroder had been hopelessly misinterpreted in his remarks and argued that financial markets were misreading the strengths of the euro zone economy.
The agenda for today's full meeting of Finance Ministers includes a debate on the practical preparations for the launch of euro notes and coins, the preparation of forthcoming meetings of the IMF and World Bank. Tomorrow, ministers will be joined by commissioners and 13 top economists and businessmen for a discussion of the prospects for the European economy 10 years hence. Their guests include the former US labour Secretary, Prof Robert Reich; the former Norwegian prime minister and head of the World Health Organisation, Ms Gro Bruntland; and the chairmen of Nokia and Renault, Mr Jorma Ollila and Mr Louis Schweitzer.
