EU debates economic slowdown

In the run-up to the Ecofin meeting, protesters "pied" Sweden's finance minister Bosse Ringholm

By BBC economics reporter Jenny Scott in Malmö

Global economic turmoil and fears of a recession are top of the agenda as European Union finance ministers and central bank heads meet in Malmö, Sweden.

They will debate how Europe can best weather the impact of the sharp slowdown in the United States.

The last time all 15 EU finance ministers and central bank chiefs got together in September, the world economy was booming. This weekend, the backdrop could hardly be more different.

The troubled US economy could drag the rest of the world down with it.

Duisenberg confident

Wednesday's unexpected rate cut by the Federal Reserve refocused attention on just how precarious the situation is.

US treasury secretary Paul O'Neill warns Europeans to brace for a downturn

In sharp contrast, the European Central Bank (ECB) has decided not to cut its interest rates for now, a decision that is expected to be a topic for discussions during much of the weekend.

ECB president Wim Duisenberg is confident that European growth remains solid. Others will disagree with this assessment.

On Thursday, US Treasury Secretary Paul O'Neill said he was "mystified" by the number of Europeans leaders who believed Europe "could have an economic life of its own independent of the US".

In contrast, Mr Duisenberg has consistently argued that "Europe is overwhelmingly dependent on domestic demand, so to a large extent it is isolated, but not entirely".

Awkward questions

Over the weekend, Mr Duisenberg could face some awkward questions from EU finance ministers keen to protect their economies from the slowdown.

Also at the meeting for the first time will be representatives from the 13 countries that have applied to join the European Union.

Most of them are from Eastern Europe, and some have high hopes to be full members in just a few years time.

But EU enlargement is a difficult economic and political issue.

The problems centre on how to integrate poorer countries into the wealthy EU club without jeopardising the living standards of existing members.

Anti-capitalist protesters have threatened to disturb the meeting. In the days before the talks, demonstrators threw a pie at the Swedish finance minister Bosse Ringholm, saying they would continue their protests at the Ecofin meeting in Malmö.

Sweden currently holds the rotating presidency of the European Union.