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European Officials Pledge Economic Growth Efforts

November 17, 1987|From Reuters

BRUSSELS — Finance ministers of the European Community on Monday committed themselves to improving conditions for non-inflationary growth in their economies.

In a joint statement issued after a daylong meeting here, they said their nations are determined to take the economic steps needed to calm the world's financial markets.

The ministers agreed to improve conditions for internally generated, non-inflationary economic growth, the statement said. But it stressed the urgent need for an early decision on further substantial cuts of the U.S. budget deficit.

"The European countries intend to cooperate actively with other countries in decisions to ensure a more stable development of world financial and foreign exchange markets," they said.

British Chancellor of the Exchequer Nigel Lawson told reporters, "Agreement on a reduction of the U.S. budget deficit is a prerequisite for a G-7 (Group of Seven major Western industrialized nations) meeting."

Monetary Cooperation Stressed

He said it would not be right to specify what measures the Europeans are prepared to take once Washington has reached an accord on its deficit.

The United States has long been prodding its European trading partners to stimulate their own economies so that they will suck in more U.S. exports and improve Washington's negative trade balance.

Monday's cautiously worded statement stressed the importance of continuing the fiscal and monetary cooperation agreed upon in last February's Louvre Accord by the United States, Japan, West Germany, Britain, France, and Canada. These nations, with Italy, compose the G-7.

Commitments made in the so-called Louvre accord must be implemented by all parties in full and without delay, the EC statement added.

"The Louvre accord still stands and is the basis of any cooperation (of G-7)," West German Finance Minister Gerhard Stoltenberg told reporters.

The recent sharp drop of the dollar has led to speculation that the accord has become virtually defunct.

Stoltenberg said that contrary to common assumptions, the United States had no interest in a further fall of the dollar.

The EC statement said a yet lower dollar would worsen economic prospects for all nations, including the United States.

EC member states would improve conditions for further internally generated, non-inflationary growth, it added.

Stemming speculation about a possible realignment of the eight-currency European Monetary System of limited floating exchange rates, the statement said: "All member countries will continue to meet in full their obligations within the existing margins of the EMS."

Lawson said he thought there had been some concern at the finance ministers' meeting over the rate of economic growth in West Germany. "I think this concern is shared by the German government itself," he added.

Stoltenberg said Bonn had fulfilled its commitments under the Louvre accord fully but would examine whether there was any need for further decisions.

He said his government would allow the 1988 budget deficit to overshoot its target if there was a shortfall in contributions from profits of the country's central bank, the Bundesbank.

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