Tuesday

17th Sep 2019

Sarkozy to announce fresh austerity as France sucked into whirlpool

  • Sarkozy has given ministers one week to come up with fresh measures (Photo: consilium.europa.eu)

French President Nicolas Sarkozy on Wednesday (10 August) has said his government will produce fresh measures to slash the country’s large public debt in an effort to stave off a cut to France’s triple-A credit rating.

The leader flew back from his summer holiday and hauled government ministers back from theirs for an emergency meeting to address the rapidly worsening eurozone crisis.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

He told his key ministries they have a week to draft sharp new austerity measures, which may include the closing of tax loopholes and spending cuts.

Paris’ promise to reduce the budget deficit from 7.1 percent in 2011 down to three percent by 2013 will be maintained no matter how the country’s economic situation evolves.

While credit rating agencies have said that the outlook for France remains stable, earlier growth predictions of two percent this year and slightly higher in 2012 may turn out to be not quite so rosy after stagnating in the second quarter of this year. Industrial production slipped by 1.6 percent in June.

If the growth predictions are not realised while deficit reduction must still be met, then the revenue gap must come from somewhere: further austerity or tax rises.

It is understood that included amongst ideas already under consideration will be the elimination of a slew of tax loopholes, freeing up monies in the single-digit billions.

Firmer figures on the growth rate for the second quarter are to be released on Friday (12 August), potentially piling up the pressure on the government.

The schedule for the announcement of new measures is frantic.

Following the delivery of new austerity proposals from his ministers, Sarkozy and his prime minister, Francois Fillon, are to decide on what must be cut in the 2012 budget on 24 August. Parliament will then consider the measures sometime in the autumn.

The crisis meeting came as French bank shares suffered a mass sell-off on Wednesday.

Societe Generale slumped 21 percent at one point, with Credit Agricole down 13 percent and BNP Paribas down 10 percent.

The tumble is the product of growing worries of French financial institutions’ exposure to Italian debt: estimated to be some €410 billion.

Separately on Wednesday, the Dutch prime minister returned home from holiday to ready the approval of new Greek bail-out measures by the country’s parliament.

Merkel and Sarkozy meet as Berlin rejects eurobonds

The leaders of France and Germany are meeting on Tuesday in a further attempt to stem the eurozone debt crisis following last week’s strong market turbulence, but Berlin has ruled out any mutualisation of euro countries’ debt.

France launches inquiry after accidental downgrade

France has reacted with anger after a major ratings agency accidently suggested it had downgraded its credit rating status, but a prominent French economist believes the country is fighting the inevitable.

Eurozone bank buys record €22bn in bonds to contain euro crisis

The European Central Bank last week spent a record €22bn buying eurozone government bonds in a bid to prevent the eurozone debt crisis spreading, a move that is likely to fuel debate on the creation of eurobonds. Details of the buying spree came on the eve of a meeting between the French and German leaders in Paris.

News in Brief

  1. Apple and Ireland appeal €13bn EU tax ruling
  2. UK PM should provide witness statement, court told
  3. Italy's ex-PM Renzi quits ruling Democratic Party
  4. German top lawmaker scolds Bettel over Johnson snub
  5. Greens decide on Tuesday on talks on Five Star joining
  6. Belgian mayors give Juncker a tongue-lashing
  7. Von der Leyen defends 'way of life' slogan
  8. Court hears case on UK's pre-Brexit parliament shutdown

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  2. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  3. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  4. Nordic Council of MinistersNo evidence that social media are harmful to young people
  5. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  6. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  7. Nordic Council of MinistersEducation gets refugees into work
  8. Counter BalanceSign the petition to help reform the EU’s Bank
  9. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  10. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  11. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  12. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat

Latest News

  1. Defending the 'European way of life' name splits MEPs
  2. Hungary claims EU 'witch-hunt' over rule of law hearing
  3. Trumpworld In Europe
  4. How EU firms and banks help fund Amazon fires
  5. Amazon fires mean EP must rethink Mercosur trade deal
  6. EU must give full support to Ukraine to dissuade Kremlin
  7. EU divided on how to protect rule of law
  8. Nordic region to become world's most sustainable and integrated

Join EUobserver

Support quality EU news

Join us