Thursday

8th Dec 2016

France says Brussels 'cannot dictate' economic policy

  • Hollande's remarks recall the dismantling of the Stability and Growth Pact (Photo: consilium.europa.eu)

France's President and Prime Minister have said Brussels has no right to tell them which economic reforms to make.

Speaking to AFP on a visit to Rodez, in southern France, on Wednesday (29 May), President Francois Hollande said: "The European Commission cannot dictate to us what we have to do. It can simply say that France has to balance its public accounts, which is true."

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He noted: "On pensions, it's a discussion which we will have with our social partners."

He added: "We have respected our European commitment on deficit reduction. But regarding structural reforms, especially pensions reform, it's for us and only us to say what is the right way to attain this objective."

His Prime Minister, Jean-Marc Ayrault, was equally defiant at a meeting in Matignon, in north-east France, with former German leader Helmut Schmidt the same day.

He said: "We will carry out reforms in our own way."

He noted: "If I think of pensions reform, it's [needed] not because Brussels has asked us to do it, but because we know it's necessary."

He added that his reform programme will help to restore France's "leading position in Europe."

The reactions come after the commission published recommendations for 23 member states, including France, earlier on Wednesday.

It gave France an extra two years to meet deficit targets.

But it also called for reforms in six areas.

It said on pensions the French treasury "will still face large deficits by 2020 and new policy measures are urgently needed to remedy this situation," proposing a hike in the retirement age among other ideas.

Commission chief Jose Manuel Barroso told press in the EU capital: "Our message to France is in fact quite challenging."

He added: "France has in the last decade lost maybe even 20 years of competitiveness."

The commission won the right to make the recommendations - which also cover areas such as tax and social policy - under the "European semester" law passed in 2011.

They are non-binding.

A second set of laws - the "two pack," which comes into force on Thursday - gives Brussels real teeth.

Under the two pack, eurozone countries such as France will have to submit their national budgets to the commission in October.

If EU officials do not like them, they can force governments to submit new proposals.

But Hollande's remarks raises the prospect that big EU countries will bully the commission, while smaller member states will have to obey - just as they did with the Union's old Stability and Growth Pact.

For his part, administrative affairs commissioner Maros Sefcovic voiced worry over the two pack at a seminar in April in Slovakia.

He said at the time: "The commission in its history never had more power than it has now."

He noted: "In September or October, the commission will send letters to Estonia or to France saying: 'Show us your budgets. We want to see them first to see if they're sustainable'."

He added: "When I present this [the commission verdict] … people might say: 'Who is this man from Brussels telling us what to do?'."

No euro crisis after Italian vote, says EU

The Italian PM's resignation after a failed constitutional referendum has not changed the situation, the Eurogroup president has said. Financial markets have remained stable.

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