EU newcomers prepare to join euro

The euro could soon mystify a new batch of people

Estonia, Lithuania and Slovenia have fixed the value of their currencies against the euro as the first step in adopting the single currency.

They are the first of the European Union's 10 newcomers to take such a step and aim to adopt the euro in 2007.

The countries will ensure that their currencies do not rise or fall by more than 15% against the euro.

Central banks would have to intervene in the currency markets should there be a deviation of more than this amount.

The three countries' finance ministers promised to pursue "sound fiscal policies" to keep their budgets in control and not undermine the stability of the single currency.

The move comes as the rules which govern spending and the euro, the Growth and Stability Pact, are being rethought

Change the rules

Germany and France, the two largest EU economies, have failed to stick to the rules which prevent a country's budget deficit from rising to more than 3% of its Gross Domestic Product (GDP).

Italy and Portugal are also expected to breach the 3% ceiling this year.

Earlier this month, the EU's economic affairs commissioner Joaquin Almunia said the pact had been "too stringent" and announced a formal review into the treaty.

Six of the 10 newcomers to the EU, including Slovakia, have budget deficits of more than 3% of GDP.

Estonia, Lithuania and Slovenia were amongst the 10 new countries which joined the 15-country EU on 1 May.