End of war to speed up EU growth

Nikos Christodoulakis, who is also finance minister of Greece, told the daily Liberation in an interview published yesterday that reforms were key and he saw no reason to alter EU budget rules in a bid to stimulate growth. "The worst is behind us. I think this year the economic situation will improve - geopolitical uncertainties will be lifted with the end of the war in Iraq," the newspaper quoted Christodoulakis as saying. He defended the EU Stability and Growth Pact, which caps budget deficits at three percent of gross domestic product. The pact has been widely criticised for hampering the euro zone at a time when countries like the US were using fiscal policy to prop up growth. "Rather than discussing the terms of this pact, we should concentrate on ways of supporting growth and employment." Christodoulakis said earlier this month he expected growth in the euro zone would only return to potential, estimated at between 2.0 and 2.5 per cent, in 2004. US Trade Representative Robert Zoellick, meanwhile, said Washington felt it was deserted by its European friends in the Iraqi crisis and that has changed transatlantic relationships.