--Says EU Economic Growth 'Certain' to Outpace US Expansion This Year
--But Admits Euro's Appreciation Could Weigh on European Exports

FRANKFURT (MktNews) - The U.S. economic slowdown will impact growth in the 15-nation European Union (EU) more strongly than thought only a few months ago, but EU growth should still come in at about 3% in 2001, EU Monetary Affairs Commissioner Pedro Solbes said in an interview.

"Europe will keep on its recent growth path with a growth rate very close to 3%", despite the U.S. slowdown, Solbes said in the interview, published in Thursday's edition of German business daily Handelsblatt.

Solbes didn't make clear whether the EU's standing forecast of 3.1% growth in the EU in 2001 -- down from 3.4% in 2000 -- is still tenable or if a slowdown to just below 3% is more likely, Handelsblatt said.

"It is certain, however, that the growth rate in the EU will be higher than in the United States this year," Solbes said.
Solbes noted that a number of factors have changed since the EU Commission made its 2001 growth forecasts in November.
"Firstly, we now have more clarity concerning the slowdown in the U.S. economy. Secondly, the euro has appreciated against the dollar since then. We cannot rule out that both factors will negatively affect the demand for our exports," Solbes said.
However, these dampening effects are being partly offset by the favorable impact of lower oil prices, he observed.
Solbes welcomed tax cuts recently passed in Spain, France, Germany, Belgium and the Netherlands, saying they provide an "important impulse" for the European economy.
But Solbes warned that tax cuts must be in line with the Stability and Growth Pact.
Solbes also defended his plan to improve economic policy coordination among the eurozone member states.
"The Commission has the duty to provide new ideas about ways to improve economic policy", he said.
While that proposal was widely welcomed, there was opposition by some finance ministers on the grounds that the Commission cannot make a formal proposal in an informal grouping like the Eurogroup, Solbes said. The criticism did not surprise him, he claimed.
"The EU's Stability and Growth Pact has delivered excellent results," Solbes said, adding that EMU member states had achieved their initial target, which was to consolidate budgets.
"Now we have to ask ourselves if we can't shape our public finances better. We have to improve their sustainability," Solbes said.