Brown calls for EU growth drive

Chancellor Brown attends the meeting in Brussels on Friday

Chancellor of the Exchequer Gordon Brown has urged European Union finance ministers to show leadership as the US economy slows down.

"The world is looking increasingly to Europe to discharge a greater responsibility in the promotion of stability and global economic growth," said Mr. Brown.

He also called for the EU to push ahead with economic reform, whilst adopting a more "radical and realistic" timeframe for achieving economic growth.

Mr. Brown was speaking at a meeting of European finance ministers in Brussels.

Necessary measures

Mr. Brown highlighted several measures that the EU should adopt to achieve its targets, and avoid a parallel slowdown to the one happening in the US.

We have got to be a modern economy and we must not allow old rules that are not relevant to the new economy

Gordon Brown

These include the reduction of all state aid and unfair tax competition, ploughing more money into research and innovation and resolving its trade differences with the US.

The Chancellor also advocated the full opening of the telecoms market by the end of 2001, the energy markets by the end of 2002 and the capital markets by the end of the 2003.

Fears of a recession

Fear exists that Europe could be dragged into recession, if the slowdown in the US does accelerate.

The European Central Bank left interest rates on hold on Thursday, having decided to wait for more evidence on the extent of any slowdown in the US economy before lowering rates.

The Fed, the US central bank, has already lowered rates by 0.5% over fears of a recession.

European growth rates are expected to fall back to around 2.5% next year, compared to around 3% this year, as a result.

Many economists believe that rate cuts, or tax cuts, or both, will be necessary if Europe is to avoid a slowdown.

Tax breaks

The main body of the finance ministers meeting focused on finding a solution to the controversial tax breaks which France and Italy have offered to hauliers who were campaigning against high fuel costs.

Abolition of these tax breaks is a political hot potato for these countries, given that the hauliers have been hit hard by high fuel costs.

The Swedish presidency put forward a new proposal on Friday, at the first meeting which it has chaired.

The Swedish proposal said all special reductions should be "limited in time," mooting a two-year extension for the French, Italian and Dutch tax breaks and a six-year extension for all other existing tax breaks. But ministers sidesteppted a heated debate, pushing back to February the agreement on Sweden's draft solution.

The previous proposal - put forward by the French presidency at the end of December - was opposed by Germany.