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European Union leaders meet in Brussels to discuss ways of keeping to Co2 emission reduction pledges at a time of economic turmoil. European Union leaders agreed on Friday (March 14) that the risk of the bloc's climate change plans hurting the competitiveness of EU industries that consume a lot of power needed to be dealt with urgently. Among their final statements the European Union's presidency said there was a real fear that industries within the bloc, scared off by punitive measures to force them to cut CO2 emissions, would relocate to third countries and continue to pollute. "The relocation of industries to third countries could cause serious social problems at home. This reelocation could even contribute to the global rise in greenhouse gas emissions because standards elsewhere might be lower than in the EU. This is a dual concern," said Slovenian Prime Minister Janez Jansa. German Chancellor Angela Merkel said: "We have very clear reduction targets, from which we will not waver. We have committed ourselves to a certain percentage of renewable energy and bio fuels, the car industry has to keep to its duty to reduce Co2 emissions...our ultimate aim is not in question... to employ the world "sustainable" in the right way - sustainability means that the social, ecological and economic needs have to be brought together in the best possible way." France joined Britain in calling for a lowering of sales tax on green products in order to change people's attitudes and give them an incentive to buy green products. The two leaders won backing from European Union leaders to study the idea but the European Commission is unconvinced. The leaders added a clause to their summit declaration inviting the European Commission "to examine how Value Added Tax can play a positive role in combating climate change", even though Commission President Jose Manuel Barroso made clear on Thursday he did not favour the idea and there was no consensus. British Prime Minister Gordon Brown said: "We've agreed that the commission in bringing forward its legislative proposals on VAT rates in the summer of 2008 and working with member states we should examine areas where economic instruments including VAT rates could have a role to play in .. I believe that that will start a debate in many member states about how, whether it be household goods, lightbulbs.. .....there are means by which we can incentivise consumer behaviour towards buying energy efficient goods and services" The growing concerns about the best ways for the European Union to maintain its comitment to cut greenhouse gases comes at a time of economic turmoil and in a week when the euro hit a new record high against the dollar. "I am not optimistic I am really worried because every day there is something new .. but we are not yet into recession," said Italian Prime Minister Romano Prodi. Data on Friday also showed that Euro zone inflation also hit a new record high of 3.3 percent in February as oil prices soared. This has added to the European Central Bank's dilemma as it faces calls to cut interest rates to boost growth. The European Union statistics office revised up February's figure for the 15-nation currency area from a previous estimate of 3.2 percent, itself a joint record at the time -- prompting concern from the chairman of euro zone finance ministers. "The Eurostat figures indicate that among the risks we are facing, we have to enumerate inflation. Inflation is growing in Europe and that is a matter for concern," Eurogroup Chairman Jean-Claude Juncker said at the summit. A consensus forecast of economists consulted by Reuters had predicted the rate would stay at 3.2 percent. Howard Archer, chief European economist at consultancy Global Insight, said the ECB would be "mortified" when it saw February's inflation rate had been revised up, especially as there were also signs of growing wage inflation. "The ECB will keep stressing that inflation currently remains a serious problem within the euro zone, and is likely to downplay the chances of an interest rate cut any time soon," Archer said in a note to clients. The bank could not ignore growing risks of an economic slowdown, compounded by new record highs for the euro and oil prices this week, but an interest rate cut might be delayed until the third quarter if inflation stayed high, he said. Compared with January, prices rose 0.3 percent, Eurostat said in a statement, in line with the consensus forecast. Energy prices jumped 10.4 percent in February from the same month last year. The food and transport components -- both sensitive to high oil prices -- grew by 5.8 and 5.4 percent respectively. Without the volatile unprocessed food and energy costs, or what the ECB calls core inflation, prices grew by 2.4 percent year-on-year -- creeping up from 2.3 percent the previous three months -- and rose 0.5 percent month-on-month.