FT: Rato faces Tough Task on EU Reforms

10 January 2002

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Over the next six months, Rodrigo Rato, Spain's economy minister, will have to use all his powers of persuasion to convince fellow finance ministers that a stagnant Europe needs a strong dose of liberal economics. The bottom line, he says, is that 'governments are going to have to explain to their own people how they intend to revive economic growth. We cannot rely on the US engine any longer'.

Mr Rato's expectations for the EU's economic summit in Barcelona in March are therefore tinged with realism. 'I think there is a broad consensus about the need to tackle supply-side reforms,' he says. 'The challenge will be to translate that consensus into real political commitment.' Success at Barcelona, he says, hinges on whether the 15-member bloc can agree on practical steps to link its energy and transport markets, and on making labour markets more efficient. There will also be complex negotiations on how to harmonise different countries' tax treatment of savings and investments and how to integrate the financial markets of the eurozone.

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