EU agreement

France and Germany Reach Currency Agreement

The French had been seeking more spending on job creation to balance the cuts deemed necessary to qualify for monetary union. But the Germans were insisting there should be no change and the French have been forced to climb down. The ministers have now agreed that the substance of the original accord should remain unchanged -- but they've made a concession to satisfy the French.

The new French Prime Minister, Lionel Jospin, had argued that the EU had become too pre-occupied with qualifying for the single currency at the expense of Europe's eighteen million unemployed, and he's been pressing for a range of measures to create jobs. But the Germans, in particular, were determined to avoid being dragged into new spending commitments and were also anxious to prevent any softening in the rules for single currency membership - the so called Stability Pact.

In the end, the compromise involved writing an annexe to the Stability Pact, focussing on growth and employment, with a promise for the EU to give a new emphasis to helping the jobless. But the only specific measures are to call a special summit on jobs in October and for the European investment bank, which is owned collectively by EU governments, to study ways of supporting smaller businesses and those involved in high technology.

For the EU's monetary affairs commissioner, Yves Thibault de Silguy, the agreement means the launch of the euro is now back on track. "We are finished all the legal and economic framework to put in place the EMU and I think it's a very strong signal for the markets, for the administration, for the states, to be ready in due time." he said.

Our Europe Correspondent David Shukman's View