Thursday

29th Jul 2021

Rehn praises Paris on 'prudent' budget cuts

  • Moscovici (l): 'I respect very much the position and role of the commission' (Photo: ec.europa.eu)

France's budget plans are “responsible and prudent” Olli Rehn said Wednesday (26 September) in a sign of rapprochement between the EU and the eurozone's second largest economy.

Speaking to reporters in Brussels following talks with French finance minister, Pierre Moscovici, the EU's economic affairs chief praised what he described as a “huge effort to restore public finances.”

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

However, he warned Paris to keep up plans to reform the country's labour market and welfare system commenting that the “ambitious reforms over the last year should be maintained.”

The meeting comes a day after Moscovici presented plans to save an additional €18 billion from next year's budget to the National Assembly in Paris.

Rehn has had an uneasy relationship with French President Francois Hollande's socialist government.

Last month, the commissioner used an interview in the French media to warn Paris that raising taxes would “destroy growth and handicap the creation of jobs."

For his part, Hollande has accused the EU executive of attempting to “dictate” policy.

The EU executive has also been frustrated by France's failure to bring down its budget deficit below the 3 percent threshold laid out in the bloc's stability and growth pact, giving the country a two year extension to meet the commitment in May.

Moscovici conceded that France would run a higher than forecast 4.1 percent this year, falling to 3.6 percent in 2014 and to 3 percent in 2015.

Meanwhile, 20 percent of new budget savings in 2014 would come from tax rises with all savings coming from spending cuts in 2015. The government would also reform the pension system and cut labour costs to increase competitiveness, he said.

Both men were keen to play down talk of disharmony. R

Rehn told reporters that the commission's role was merely to make sure that commitments made by governments were respected.

“The new rules are aimed at preventing rather than correcting problems,” he said.

Moscovici insisted that there is no tension with Brussels.

“I respect very much the position and role of the commission ... this a normal dialogue,” he noted.

After over a year of stagnation, the French economy expanded by 0.5 percent in the second quarter of 2013, an encouraging sign that the eurozone's second largest economy would grow over the course of the year. However, growth is only expected to be an anemic 0.9 percent in 2014.

Meanwhile, the country's debt to GDP ratio is set to peak at a record 95 percent in 2014 before starting to fall the following year.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

News in Brief

  1. US backs WHO plan for further Covid-origin investigation
  2. EU to buy 220,000 supplies of potential Covid treatment
  3. Report: Balkan states seek 'mini-Schengen'
  4. Lithuania sees new spike in migrant crossings from Belarus
  5. Google challenges Germany's new hate-speech law
  6. EU pauses Brexit legal threat on Northern Ireland
  7. US names its ambassador to EU
  8. UK in talks with US for travel corridor

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 MinistersNineteen demands by Nordic young people to save biodiversity
  2. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  3. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  4. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  5. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  6. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance

Latest News

  1. EU and UK frustrated at US travel ban extension
  2. Polish judges rally behind EU court ruling
  3. Why 'Fit for 55' isn't fit for purpose
  4. EU hits vaccination target, as Delta variant now dominates
  5. European arms 'displaced over a million people', research finds
  6. Brexit: what is the 'Lugano Convention' and does it matter?
  7. US maintains summer travel ban on EU tourists
  8. Does democracy need troublemakers?

Join EUobserver

Support quality EU news

Join us