20000330

EU urges UK continue "stability oriented" policies

BRUSSELS: European Union finance ministers welcomed on Monday Britain's latest budgetary projections for the tax years 1999/00-2004/05, saying the U.K. met all criteria for economic and monetary union (EMU) except exchange rate stability.

But in a statement, the finance ministers did not repeat a recommendation made by the EU excecutive Commission for Britain to put the pound back into Europe's exchange rate membership. "With respect to inflation and interest rates, the United Kingdom continues to fulfil the convergence criterion (for EMU) with some margin," the EU statement said.

It added the inflation target set for the Bank of England by the government "has been an important condition for securing low inflation expectations" and that, if achieved in the coming years, would be in line with the European Central Bank's definition of price stability.

The statement said Britain's budget balance, debt and long-term interest rates were also within levels required for EMU but that this macro-economic policy framework had not yet delivered a stable exchange rate.

Repeating a statement made last year, the ministers recommended "the United Kingdom continue with stability oriented policies with a view to securing exchange rate stability which, in turn, should help re-enforce a stable economic environment"-Reuters