The euro has proven its ability to resist major economic crises in the wake of the September 11th terrorist attacks, the president of the European Commission, Mr Romano Prodi, has declared.

"There was an economic shock but the impact will be less pronounced than in the United States, thanks to the euro. We are better protected. Imagine what would have happened if there had not been a euro.

"With it, the EU is better protected against external shocks. The euro has increased our capacity to act together and to react rapidly," he said.

Speaking just 74 days before the euro becomes everyday currency, he bluntly warned member-states to guarantee that its introduction will be "as successful and smooth as possible".

The Commission expects the 15 EU economies, all of which were slowing down prior to September 11th, to grow this year by around 1.5 per cent - and some could even contract temporarily.

"The recovery will be delayed but there will be no recession. We expect the recovery to start in the second half of next year. Unemployment rises will also be contained," he said in Brussels at a press conference held in advance of today's EU summit in Ghent.

The EU does not have a trade deficit, enjoys better savings records by its citizens and has falling inflation. "These are important, reassuring messages," said Mr Prodi.

Further interest rate cuts are on the cards, the European Central Bank has hinted in its latest monthly bulletin. Unusually, the ECB also appears sanguine about inflation, and analysts said the language suggested another rate cut was in the works.

According to the ECB, euro-zone inflation is to drop below its 2 per cent tolerance ceiling, with a recent drop in oil prices diminishing inflationary pressures.