Friday

23rd Jun 2017

Juncker casts doubt on eurozone entry rules

Days before the European Commission unveils its opinion on two countries that have applied to join the euro, the head of the eurogroup Jean-Claude Juncker has challenged the inflation criterium for judging new entrants.

Jean-Claude Juncker, who chairs the group of eurozone finance ministers, on Thursday (11 May) said that the EU should be careful in interpreting the rules for entering the common currency, hinting that it may not be sensible to judge a country's performance according to inflation in the whole EU, but just in the 12-member euro bloc.

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  • Mr Juncker is calling for a "sensible" interpretation of eurozone entry rules (Photo: Council of the European Union)

"We must watch out that the Maastricht treaty is interpreted sensibly. That the ERM inflation criterion is based on EU rather than euro zone inflation ... is not necessarily the wisest course," he said, according to Reuters.

Within the list of economic and monetary criteria that underpin the euro, the inflation rule has become particularly controversial for Lithuania, waiting eagerly for a verdict from Brussels next week on whether it can join the euro in 2007.

It is expected that the European Commission will approve Slovenia's entry by January, but will argue that Lithuania is not yet ready due to its higher inflation rate.

In order to join the eurozone, countries must have an inflation rate which is not higher than the average of the three lowest rates in the eurozone, plus 1.5 percent.

Lithuania in March registered an average annual inflation of 2.7 percent, just 0.1 percent higher than the EU-set target of 2.6 percent.

But Lithuanian officials have criticised the fact that two of the three lowest inflation recording countries - Poland, Sweden and Finland - are outside of the eurozone, yet still they are influencing this key decision.

EU leaders will discuss the opinion of the commission and the European Central Bank on Slovenia and Lithuania at top June summit and the final decision is to be made by finance ministers on 11 July.

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