Robust economic growth in the fourth quarter last year has helped several European countries meet the key qualifying conditions for the single currency.

Germany, France and Italy are among 14 countries that have cleared the most difficult hurdle set by the European Union's Maastricht treaty: a deficit-togross domestic product ratio of 3 per cent or less.

The success was due to a combination of budgetary rigour over several years and an unexpected pick-up in economic activity, especially in the final quarter last year.

The economic performance will also be a relevant factor in the convergence reports by the European Commission and the European Monetary Institute, the forerunner of the future central bank.

Both reports, due out on March 24th, will assess the readiness of each of the 15 EU members to participate in the economic and monetary union (EMU) on the basis of yesterday's data and a projection of whether the performance is sustainable over the next few years.

Expectations of a pick-up in economic activity is bound to affect the reports' conclusions, given the sensitivity of budget deficit to economic growth. The reports may question whether the fiscal performance of some of the countries can be sustained, but they are unlikely to reach any firm conclusions.

Mr Theo Waigel, the German finance minister, yesterday predicted a fall in deficits and debts in the current year.

The weakest point in France's compliance with the Maastricht criteria was the 1997 budget deficit: just above the ceiling at 3.02 per cent of GDP. The result was achieved with Brussels permitting the inclusion of the FFr37.5 billion ($6.3 billion) oneoff transfer of the France Telecom pension fund to the public administration accounts. This was worth the equivalent of 0.5 per cent of GDP.

However, the main improvement in the deficit came from an upswing in fiscal returns as a result of the strong second-half recovery producing 2.4 per cent growth for the year.

Mr Dominique Strauss-Kahn, the French economy minister, said yesterday the continued recovery would produce 3 per cent growth as targeted in the 1998 budget which aimed to bring the deficit down to 3 per cent.

In Italy, growth was also projected to increase beyond previous estimates. Mr Carlo Azeglio Ciampi, the treasury minister, said the economy would be growing by more than the previously forecast 2.2 per cent this year, which would help the public finances.

Italy's budget-deficit-to-GDP figure of 2.7 per cent for 1997 met the most optimistic expectations about the country's performance in 1997 and was brought about by a mix of tax rises and drastic spending cuts introduced by Mr Romano Prodi's government.

The government is planning over the next few years to pay back 60 per cent of the euro-tax that was levied. But the treasury believes that, despite this, reductions in short-term interest rates and higher than expected economic growth will keep downward pressure on the budget deficit to GDP figure in 1998.