Rapport ECB en Europese Commissie: Nieuwe lidstaten nog niet klaar voor de euro (en)

EUOBSERVER / BRUSSELS - The ten new member states that joined the EU in May have a very long way to go before they can join the single currency, according to a European Commission report published today (20 October).

Not one of the ten countries yet meets all five economic criteria set by the European Commission for joining the euro zone, reveals the report.

Lithuania is the closest, with three of the criteria passed.

Sweden - whose voters overwhelmingly rejected the euro in last year's referendum - passes only three out of five. And Poland and Hungary fail all five tests.

The Commission's criteria assess exchange rates, price stability, interest rates, deficits and the status of central banks in the country.

Presenting the report, economics and monetary commissioner Joquin Almunia said, "satisfying the accession criteria has required a huge effort on the part of new member states. Much progress has been made in terms of convergence but the road to euro membership requires further efforts".

In the waiting room

Three of the ten newcomers - Lithuania, Estonia and Slovenia - have already joined the Exchange Rate Mechanism (ERM) II, to which countries must adhere for two years before joining the euro.

And Mr Almunia has hinted that Latvia and Cyprus will soon follow suit.

ERM II is the "holding bay" that countries must enter before joining the euro and allows national currencies to fluctuate against the euro only within a small band.

All new member states are obliged by the terms of their accession treaties to aim for euro membership, but they may choose when they aim to meet the necessary criteria. "The decision on how and when they join the euro will not be imposed by the Commission", confirmed Mr Almunia today.

Held back by deficits

The report makes clear that reducing ballooning budget deficits - for so long a problem in the current euro zone of 12 countries - remains a huge challenge for euro hopefuls.

Member states must reduce their budget deficits - broadly speaking tax receipts minus public spending - below three percent of gross domestic product (GDP) before they may join the euro.

But only Estonia, Lithuania, Latvia and Slovenia have deficits below the three percent ceiling. The remaining six countries are all in breach of the EU's rules on deficit spending.

Same conclusion from the ECB

The European Central Bank (ECB) also published a report with similar conclusions today. ECB President Jean-Claude Trichet told a press conference in Frankfurt this morning that all the countries concerned "have challenges still to overcome before being able to adopt the single currency".

The earliest a new member state could possibly join the euro is 1 January 2007. Cyprus, Estonia, Lithuania and Malta aim to join in 2007. Other member states have said they are not rushing to join at the earliest possible opportunity.

These "report cards", known in Brussels jargon as "convergence reports" have to be submitted every two years by all EU members who are not part of the 12 country euro zone.

The UK and Denmark have not joined the euro zone, but are not included in this report as they have a Treaty opt-out from joining the single currency.