Sunday

24th Oct 2021

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

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."

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.

News in Brief

  1. Russia's anti-vax campaign backfired, EU says
  2. China angered as MEPs call for Taiwan talks
  3. Emissions from La Palma volcano reach Brussels
  4. Body of eighth victim of Belarus border-crisis found in river
  5. Report: Syrian bank fiddling currency to evade EU sanctions
  6. Nato adopts plan to counter new Russian threats
  7. Alleged killer of British MP 'felt affiliated' to IS
  8. Coronavirus: Belgium returns to 'red' zone

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. EU states want more Belarus sanctions
  2. Gas price spike exposes rift at EU summit
  3. Poland vows not to give into EU 'blackmail' at summit
  4. EU vows to uphold Paris climate ambition amid scientists' fears
  5. Commissions's new migration pact still seeking 'landing zone'
  6. Europe can't ignore Chinese encroachment in Ukraine
  7. Lithuania - where 'biodiversity funding' is cutting down trees
  8. Dutch lawyers take Frontex to EU court over pushbacks

Join EUobserver

Support quality EU news

Join us