MUNICH, June 8: European Union center-right parties have agreed not to challenge the bloc’s budgetary “stability and growth pact” in a group drawing up EU reforms, a senior conservative member of the European Parliament said on Friday.

Speaking at a conference on EU enlargement organized by Munich’s Ifo institute, Elmar Brok, who is also a member of the Convention on the Future of Europe, said fiddling with the pact now would send completely the wrong political signals.

Brok said members of the Convention allied to the European People’s Party, a grouping of European center-right parties, agreed at talks on Thursday that there would be no softening (of the pact) in the Convention.

This is a firm decision, Brok said.

The Convention on Thursday set up a group to look at economic policy reform issues as part of a broader debate underway in Brussels about how the EU should operate if, as expected, it expands to take in new members, mainly from eastern Europe, in 2004.

The mandate of the group, which met for the first time in Brussels on Friday, asks members to examine whether changes should be made to the budgetary rules underpinning the euro.

The group may wish to consider whether the Stability and Growth Pact operates effectively, and if not, how it might be improved, the mandate says.

Does the introduction of the euro affect the arguments for adapting it to take into account the difference between structural and conjunctural deficits? it asks.

The debate is being launched at a sensitive time. France’s new center-right finance minister said on Thursday the pact “was not written in stone” and could be challenged collectively. British Finance Minister Gordon Brown has also expressed unhappiness about how the pact operates.

The pact also applies to countries, like Britain, not in the euro zone, although those countries cannot be fined or penalized for breaches of the 3 per cent limit on budget deficits that it sets.

—Reuters