Thursday

22nd Oct 2020

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.

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.

News in Brief

  1. Belarus opposition awarded 2020 Sakharov Prize
  2. Belgium's foreign minister in intensive care for Covid-19
  3. MEPs restrict CAP funding for bullfighting
  4. Coronavirus: Liège is 'the Lombardy of the second wave'
  5. UK to keep out EU nationals with criminal past
  6. Report: EU to restrict travel from Canada, Tunisia, Georgia
  7. Pope Francis supports same-sex civil unions
  8. EU Commission to increase use of open-source software

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

Stakeholders' Highlights

  1. UNESDAMaking healthier diets the easy choice
  2. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  3. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  4. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  5. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  6. UNESDAReducing packaging waste – a huge opportunity for circularity

Latest News

  1. Nato and EU silent on Turkey, despite Armenia's appeal
  2. EU tells UK to decide on Brexit as deal 'within reach'
  3. EU farming deal attacked by Green groups
  4. France vows tough retaliation for teacher's murder
  5. All eyes on EU court for decision on religious slaughter
  6. 'Big majority' of citizens want EU funds linked to rule of law
  7. EU declares war on Malta and Cyprus passport sales
  8. EU Commission's Libya stance undercut by internal report

Join EUobserver

Support quality EU news

Join us