(Adds comments on Euro group/ECB policy, SocGen, French deficit, EU president role)
PARIS (Thomson Financial) - Euro group president Jean-Claude Juncker told Les Echos that 'there will not be a recession in Europe' this year.
Growth in the euro zone will be below levels seen in 2006 and 2007, but 'will only be slightly below trend growth (of 2 pct),' he said in an interview published this morning.
Juncker challenged IMF's reduced forecast of 1.6 pct GDP growth for the euro zone this year as 'not very credible', arguing that the European Commission's growth forecasts to be published mid-February would provide a better indication.
He dismissed the idea of a US-style stimulus package given that the euro zone is not facing the risk of a recession, 'unlike the US'.
'There is not currently in Europe any need to launch a vast economic stimulus programme,' he said, adding that the EU stability pact allows for a number of measures to respond to major economic difficulties.
Regarding a French proposal to hold Euro group summit meetings, Juncker said he was not opposed provided there is a clear agenda and that value can be added by the involvement of heads of government.
Germany has opposed the idea because the agenda for such meetings is not clear, he noted, adding that supporters of Euro group summits should 'give precise indications as to the issues to be discussed.'
Concerning the European Central Bank, Juncker said the Euro group and the central bank have in recent months 'devoted hours to (discussing) exchange rate policy,' as well as interest rates.
But he stressed that market turbulence meant that 'it would be unhealthy, dangerous even' to communicate externally on the Euro group's monetary debates, even if this can give the impression the body is not contributing to policy, he noted.
At the same time, Juncker said he is in favour of the Euro group becoming 'a formal group with the possibility of taking decisions and communicating them.'
He also defended the ECB, saying that it bases its policy on various sources and 'is not deaf'.
On the trading scandal at French bank Societe Generale, he called for greater harmonisation of supervision rules in Europe, while distancing himself from the idea of a centralised European regulator.
He also warned that if progress is not made on this issue at the EU level, the Euro group will push ahead on its own, arguing that 'it is necessary to have in a single monetary zone similar rules for supervision and risk management.'
Regarding the French budget deficit, Juncker insisted that 'France cannot unilaterally change the timetable' that calls for countries to balance their budgets by 2010.
President Nicolas Sarkozy told the Euro group last July that France may not meet the deadline, and had set its own target of 2012.
Juncker said he did not entirely share the concerns of the European Commission that France's deficit may soon exceed 3 pct of GDP, but warned that 'France will have to make further consolidation efforts'.
Asked if he is a candidate to be the first president of the EU, Juncker said 'everything will depend on the exact description of the role,' saying that he has no desire to fulfil an honorary position. tfn.paris@thomson.com gt/slm/gt/ra COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2008 AFX News
