By Bruno Waterfield - 19th October 2004
New EU countries must work harder to move towards economic and monetary convergence, the European Commission has concluded.
There are 13 national capitals outside the EU’s economic and monetary union (EMU), two, Denmark and the UK, have a treaty opt-out.
Of the other 11, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovakia and Sweden, Brussels finds that none are ready yet to join the euro.
“The report indicates that none of the countries examined fulfils all conditions for adopting the euro at this stage,” said commission statement.
To join EMU national governments must make good on five criteria: price stability or low inflation, low public debt, legal compatibility with euro rules, exchange and interest rates.
The commission’s analysis follows EU entry for ten, mainly Central and Eastern European countries – all are required to join the euro as a condition of membership.
And EU economic and monetary affairs chief Joaquin Almunia called on new Europe to make the same level of effort made for membership.
“Satisfying the accession criteria has required a huge effort by all new member states,” he said.
“A lot of progress has been made with convergence but the road to euro membership requires further efforts. I hope that the next report in 2006 provides a good incentive for further progress.”
Three countries, Estonia, Lithuania and Slovenia, have been participating in the EU’s exchange rate mechanism – designed to check currency stability against the euro – but not for a long enough assessment period.
The three – the new EU’s closest to euro membership – could be ready to sign up to the single currency in 2006 if they meet the other criteria.
Only five countries met inflation targets: the Czech Republic, Estonia, Cyprus, Lithuania and Sweden.
And only five meet tough EU rules on levels of public debt: Estonia, Latvia, Lithuania, Slovenia and Sweden.
Eight countries fulfilled interest rate targets: the Czech Republic, Cyprus, Latvia, Lithuania, Malta, Slovenia, Slovakia and Sweden.
But on legal compatibility, the independence of national central banks and integration with other EU central banks, no countries made the grade.
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