The government has indications of better economic prospects and these will be presented in consultation meetings in the coming days, Finance Minister Tonio Fenech said tonight.

He made his comments at the opening of the Malta Trade Fair in Ta' Qali but gave no further details.

The economy has undergone two quarters of negative growth and Mr Fenech's comments came hours after he told journalists that the government needed to find ways to reduce its spending, without harming the economy, after a European Commission call for Malta to reduce its excessive budget deficit by the end of next year.

Mr Fenech said the government had managed to cushion the impact on Malta of the international economic crisis by intervening directly to protect some 2,500 jobs.

Had that not been done, the current situation in Malta would be far worse.

In the current climate, Mr Fenech said,it was not surprising that consumers were being cautious. This meant that it was the businesses which offered the fairest prices and best services which could most attract custom.

Safeguarding jobs was the best assistance which the government could give businesses because it ensured that trading activity continued. But the government had also given assistance through various investment schemes to particular sectors such as tourism and manufacturing. €30 million of EU funds had been allocated for this purpose and the first tranche of €9.5 million would be absorbed mainly by SMEs.

Mr Fenech said he appreciated that over the past 18 months, several sectors had faced price pressures as a result of the international increase in the price of oil and cereals. However some price increases, particularly for certain services, did not appear justified.

Consumers were more aware of the choices available, he said, and more were opting for purchases abroad or through the internet.

The government, Mr Fenech said, was updating the consumer and competition laws and announcements would be made in the coming weeks.

It was also working on the creation of an agency which would safeguard fair competition and ensure that there were no price abuses.

Ultimately, Mr Fenech said, businesses needed to appreciate that fair competition benefited everyone.