Spain Highlights Currency Imbalances

Spain, the new holder of the European Union’s rotating presidency, said on Friday the British pound’s sharp fall against the euro had disrupted trade among EU countries, but was less important than global currency imbalances.

“The fact that the pound has depreciated against the euro has consequences for trade among our countries. In Spain we’ve already felt this in our tourist sector” Elena Salgado, finance minister, told reporters. “But right now in Europe we’re more concerned about global imbalances than any potential imbalances within the EU.”

Ms Salgado's comments on global currency alignments echoed remarks made on Thursday by Nicolas Sarkozy, France’s president, who attacked what he called “monetary disorder”, notably the US dollar's depreciation against the euro.

But Ms Salgado’s guarded statement about the pound’s fall underlined Spain’s concern not to highlight potentially divisive issues among EU member states when Madrid has only just assumed the 27-nation bloc’s presidency.

“What we need is for Europe to become more competitive and not worry too much about differences between our countries” she said.

Ms Salgado also threw Spain’s weight behind the European Central Bank in saying that her government did not support a relaxation in the eurozone entry criteria for countries such as Estonia, Latvia and Lithuania that have been especially hard hit by the financial crisis and recession.

“Frankly, as far as early entry is concerned, I’m afraid that there are procedures that have to be followed. That’s what has made the eurozone resilient. We have to maintain these standards. I don’t think we should make any exceptions right now” Ms Salgado said.

Countries aspiring to adopt the euro must meet a set of criteria, defined in EU treaty law, such as low inflation rates, budget deficits and public debts. They are also expected to spend at least two years in an exchange rate mechanism, testing their currency stability, before being granted admission to the eurozone.

But policymakers in several central and eastern European states have contended that the most effective way of helping their economies survive the financial crisis and recession would be to permit them accelerated entry into the eurozone.