SEVILLE, June 22: European Union leaders confidently declared on Saturday that the bloc’s economic downturn was over and said agreed reform measures would underpin recovery.

“The recent downturn in economic activity has ended,” the 15 leaders declared in draft conclusions from their two-day summit.

“The European economy is set to reap the benefits of sound macroeconomic policies and ambitious economic reform, which will underpin the ongoing recovery of growth and job creation.”

The draft text restated the leaders’ commitment to the stability pact, aimed at preventing member countries from driving up debt levels and threatening inflation, and backed the Broad Economic Policy Guidelines (BEPG) drawn up by their finance ministers earlier in the week.

“The European Council...reaffirms its commitment to the Stability and Growth Pact and to fiscal consolidation and calls on member states to follow budgetary policies in line with BEPG recommendations,” the draft said.

“Member states are encouraged to use any growth dividend related to the economic recovery to consolidate public finances further,” it said.

At a lengthy meeting of finance ministers on Thursday, France said it would only meet a commitment to move its budget deficit close to balance in 2004 if economic growth was strong.

All 15 EU nations agreed to balance their budgets by 2004 in the stability pact signed five years ago, but France said recently it may now not be able to do so before 2007 to implement President Jacques Chirac’s election promises.

Finance Minister Francis Mer said on Thursday France will bring its budget close to balance in 2004, but only if the French economy grows by at least three per cent next year. It is expected to grow by just 1.5 per cent this year.

But a concession was wrung from Paris that any reductions in tax would be matched by equivalent spending cuts.

The EU leaders said the economic reform agenda first agreed at a Lisbon summit two years ago, on deregulating key markets, must be “vigorously pursued”, particularly the final stage of the opening of electricity and gas markets.

Earlier this year, France agreed to allow foreign companies to compete in its energy market for commercial users but kept its domestic market under wraps.—Reuters