Eurozone worries over exchange rate

While France has repeatedly stated its concern over the effects of a continuously appreciated euro on the eurozone's external competitiveness, Germany, the Netherlands and Austria seem to be less troubled by the euro's recent high flight.

German Finance Minister Peer Steinbrück insisted on 8 October that he actually "preferred a strong euro".

Dutch Finance Minister Wouter Bos said at the meeting: "The whole idea of monetary union was to make a strong euro. Now that there is a strong euro I think we should be glad that others have confidence in our economy and that is something to be proud of."

Austrian Finance Minister Wilhelm Molterer stated that he was "happy" about the strength of the European economy.

Meanwhile, Socialist MEPs warned that the currency's strength, together with the financial markets crisis could hit growth and require coordinated action by governments. Socialist group spokesperson on economic and monetary affairs, Ieke van den Burg said: "Ministers cannot afford to take the view that the market crisis is only a problem for the banks. As the IMF has warned, it is a crisis that is about to hit government budgets and damage growth. We need firm action by ministers to prevent the crisis from deepening."

The European Trade Union Confederation (ETUC) has also called on EU finance ministers and the Commission to take action to avoid "brutal swings in the euro exchange rate". "It is too easy for policy-makers to say that a too expensive euro should be no problem if workers moderate wages. This approach would perhaps save European exports but it will certainly kill domestic demand and abort the recovery," ETUC Deptuy General Secretary Reiner Hoffmann said.

European employer association BusinessEurope President, Ernest Antoine Seilliere urged finance ministers to raise their voice and defend the euro area interests at the upcoming G7 meeting in Washington (see EurActiv 04/10/07).