Sunday

24th Jun 2018

EU unlikely to punish France for budget lapse

  • Ayrault said he was 'shocked' by the self-immolation in Nantes (Photo: OliverN5)

France predicts it will fail to meet EU budgetary targets this year, but the European Commission is unlikely to take action.

French Prime Minister Jean-Marc Ayrault told national TV on Wednesday (13 February) that the EU target of 3 percent budget deficit by the end of this year is slipping out of reach.

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.

... our join as a group

"We won't be there exactly at 3 percent in 2013 for a simple reason because growth in France, in Europe and the world is weaker than expected," he said.

"We won't be far off … The objective, and this will be achieved, is to have zero deficit by the end of the quinquennium [2017]. What counts is the trajectory," he added.

French foreign minister Laurent Fabius and budget minister Jerome Cahuzac made similar statements earlier the same day. "The probability of hitting this target [3%] has been reduced as growth has been fading," Cahuzac said.

Under the terms of the EU's fiscal compact treaty, which entered into force on 1 January, the commission can fine profligate countries and give the money to its Luxembourg-based bailout fund, the ESM.

But the guardian of the treaty, economic affairs commissioner Olli Rehn, also on Wednesday signalled he will take a soft approach.

"If growth deteriorates unexpectedly, a country may receive extra time to correct its excessive deficit, provided it has delivered the agreed structural fiscal effort. Such decisions were [already] taken last year for Spain, Portugal and Greece," he said in a letter to eurozone finance ministers published on his website.

Rehn also defended the commission's pro-austerity policies.

In a nod to recent comments by the International Monetary Fund (IMF) that European budget cuts risk harming economic recovery, Rehn said the austerity/growth debate "has not been helpful and has risked to erode the confidence that we have painstakingly built up over the past years in numerous late-night meetings."

He noted that Belgian and Italian costs of borrowing have fallen on the back of budget cuts.

"Carefully calibrated fiscal consolidation remains necessary in Europe," he added.

France plans to cut €38 billion from public spending in 2013.

But its original 2013 budget plan was based on forecasts of 0.8 percent growth, while economists now predict French growth to stay at 0.1 to 0.3 percent.

In a reminder of what the crisis is doing to average people, a 43-year-old unemployed man committed suicide by setting himself on fire outside a job centre in Nantes, in western France, on Wednesday.

He said in a note sent to a local newspaper that he did it because he was refused unemployment benefit.

Ayrault said the incident caused "shock ... very strong emotion" and called the economic situation a "human drama."

More than 3 million people, or 11 percent of the workforce, cannot get a job in France. The figure is more than 25 percent in Greece and Spain.

French police raid IMF chief's flat

In what could prove a distraction from her role in helping to save the euro, French police have raided the Paris flat of IMF chief Lagarde.

EU criticises France on economic 'imbalances'

France and Slovenia moved a step closer to the eye of the eurozone storm after being censured by the European Commission for having "macro-economic balances."

Opinion

Why austerity is failing in Europe

Until recently, Brussels has supported primarily front-load austerity measures. When President Hoover tried similar policies in the 1930s America, a severe recession morphed into a devastating Great Depression.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

News in Brief

  1. Venice Commission: Hungary should repeal NGO law
  2. Trump threatens to slap 20 percent tariff on EU cars
  3. EU closes deficit procedure against France
  4. Romania's ruling party leader gets jail sentence
  5. EU states defer individual decisions on asylum reforms
  6. Commission opens case on Qatar gas flow
  7. EU adopts posted workers directive
  8. EU leaders to call for 'coordinated plan' on AI

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  3. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Latest News

  1. EU leaders still in search of migration plan
  2. Migration row at centre of EU summit This Week
  3. Merkel's woes cast shadow on EU's future
  4. Europe's tech race - trying to keep pace with US and China
  5. Merkel and Juncker's mini-summit risks fiasco
  6. Greece and creditors proclaim 'end of crisis'
  7. How a US firm pushed for EU €2.1trn pension fund
  8. Commission defends Africa migrant plan ahead of summit

Join EUobserver

Support quality EU news

Join us