AMSTERDAM (AFP) - The creation of the euro has brought economic stability to Europe but has yet to spark growth, as eurozone governments have failed to implement reforms, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.
"Overall, (European) economic and monetary union has succeeded in delivering macroeconomic stability but it has not yet delivered economic dynamism," Almunia told a conference held to assess the first five years of the euro's existence.
"This is not due to failures of macroeconomic policy but rather to the fact that, despite progress in structural reform, European product and labour markets are still not sufficiently flexible."
He cited in particular the failure of certain eurozone governments to respect agreed-upon budget and public deficit limits and difficulties in coordinating economic policy.
"In economic policy coordination, we have faced over the last five years a lot of problems similar to those of fiscal coordination."
While there had been "a plethora of goals sets at European level," notably at a European Union summit in Lisbon 2000, there had been "weak implementation and delivery at national level."
The Lisbon summit called for measures to make the European Union the world's most competitive economic area by 2010. But goals adopted in the Portuguese capital now seem unlikely to be met in the face of repeated delays.
Addressing the same gathering here, Dutch Finance Minister Gerrit Zalm agreed with Almunia.
"The single most important goal of ever-further integration, improving growth, has not yet been achieved," he said.
"The impetus for structural reforms needs to be strengthened."
Almunia also told the conference that the current level of the single European currency, used in 12 EU countries, against the dollar was not a problem and that volitility on foreign exchange markets was on the decline.
He said the value of the euro was no longer as great a concern as it was last year, when the single currency was rising sharply.
"Instead, the focus has now shifted towards the likely impact of high oil prices on global growth and inflation.
"We share the prevailing view that the recovery in the euro area and the global economy remains on course, and we do not see the current value of the euro as presenting a problem in this respect."
Also addressing the conference was the director general for economic and monetary affairs at the EU's executive commission, Klaus Regling.
He reiterated the commission's insistence that the 1997 Stability and Growth Pact be modified through a better definition of the "exceptional circumstances" that allow signatories to the accord to escape sanctions for failing to respect it.
The pact in its most controversial provision requires eurozone members -- at the risk of financial sanctions -- to hold their annual public deficits to less than three percent of output.
Several countries, notably France and Germany, have failed to honor the commitment but have nonetheless managed to escape punishment.
"The definition of 'exceptionnal circumstances' which exempt the country concerned from being placed under the excessive deficit procedure when deficts are above three percent of GDP could be adpated in order to better cater for protracted slowdowns."
He also called for the pact's corrective procedures to be adjusted to take "into account cyclical conditions and risks to sustainability."
The two commission proposals, which the commission hopes will restore the pact's credibility, have been criticized by the European Central Bank.
"We should accept that certain parts of the fiscal coordination framework need to change over time, in line with changing economic circumstances," he said.
"The available enforcement mecanisms, including early warnings, should be used promplty and effectively."