• Paris: Hollande has threatened to tear up the treaty during his election campaign (Photo: Moyan Brenn)

Hollande faces down EU fiscal pact rebels

10.10.12 @ 10:31

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - France will become the latest country to ratify the EU's fiscal compact treaty after President Francois Hollande faced down his first parliamentary rebellion and saw the agreement passed by a large majority in the National Assembly on Tuesday (9 October).

A bill to adopt the treaty, which enshrines debt and deficit ceilings from the EU's stability and growth pact in national constitutions, was backed by 477 votes to 70.

Two hundred and eighty two Socialist party deputies voted in favour of the deal, sparing the recently-elected President Hollande the embarrassment of relying on opposition centre-right UMP votes to secure a majority.

However, despite pleas from Prime Minister Jean Marc Ayrault to back the deal - which critics say would make it impossible for countries in recession to put in place economic stimulus measures - 45 deputies from Hollande's 315 member socialist/green coalition either opposed it or abstained.

The numbers add up to the largest parliamentary revolt in Hollande's short presidency.

Hollande himself welcomed the result, insisting that "this sweeping majority will give France a bigger voice, that is to say that it will enable us to forge ahead with the rebuilding of Europe that I have committed to since my election."

The bill is now expected to be rubber-stamped by the Senate on Wednesday (10 October).

Hollande had during his election campaign earlier this year promised to tear up the treaty, before backing down and saying the June EU summit had offset the measures by putting in place a €120 billion package to drive economic growth and job creation.

For his part, Andre Chassaigne, the leader of the left-wing opposition faction in the French lower house, praised the rebels who had chosen to "reject the shackles this austerity treaty imposes on the people of Europe."

He added that the treaty would lead France "towards the abyss of recession."

The vote came against the backdrop or rising concern about the strength of the French economy and unemployment, which has hit a 13-year high.

Two weeks ago Hollande announced a budget of tax rises and spending cuts to plug a €37 billion hole in the country's public finances and to bring the budget deficit down to the 3 per cent limit.

Even this figure is likely to require further revision, after the IMF said on Tuesday the French economy will grow by a meagre 0.4 percent this year, well below the 0.8 percent which Paris had expected and on which it based its cuts. 

The fiscal compact is an intergovernmental treaty which was agreed at an EU summit in December 2011, with Hollande's centre-right predecessor Nikolas Sarkozy and German Chancellor Angela Merkel among its main supporters.

It is not part of the EU treaty because the UK and the Czech republic refused to sign up to the deal. It will come into force when 12 of the 17 eurozone countries have ratified it.