Saturday

23rd Sep 2017

Germany points to France's deficit commitments

  • France is to pass budget cuts and reforms worth €50bn on Tuesday (Photo: Moyan Brenn)

France's new finance minister Michel Sapin on his first trip to Berlin on Monday (7 April) gathered support for more reforms and budget cuts, but was referred to the European Commission on a deficit deadline postponement.

Sapin and his German counterpart, Wolfgang Schaeuble, tried to put up a united front in a joint press conference after the meeting.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

They emphasised the things they agree upon – banking union, a financial transaction tax, more competitiveness, more growth.

Schaeuble said they "get along well" and "value each other".

"We may not have the same political ideas," said the German centre-right politician about his Socialist counterpart. "But Franco-German cooperation is beyond that, we have a firm democratic commitment irrespective of the result of elections."

Sapin even joked that when people are confused about the former economy and finance ministry now being split in two, he explains: "I am the French Schaeuble."

But pleasantries aside, the elephant in the room and recurring question from journalists was Sapin's first announcement as finance minister – that he will seek an extension to the already-delayed deadline for France to meet the EU deficit target of three percent of GDP.

The EU commission last year gave France a two-year extension to bring its deficit below three percent from 4.3 percent in 2013.

Schaeuble said this was not a topic for discussion and pointed to Sapin's reassurances that France will stick to its commitments.

Sapin said this was something to negotiate with the EU commission – a first occasion being at the end of the week in Washington when the acting economics commissioner, Siim Kallas, will participate along with Schaeuble and Sapin at the International Monetary Fund's spring meeting.

The new French finance minister emphasised his government's commitment to make economic reforms and budget cuts, with a €50 billion package of measures being put to the parliament's vote on Tuesday.

"I wanted to inform the German finance minister what the French government decided and will announce tomorrow in a confidence vote in the Parliament," Sapin said, stressing that the reforms package is linked to the survival of the newly reshuffled government.

He said the lesson learned from the bruising local elections result was that the government needed to move "faster and more coherently" on reforms.

But he also talked a lot about a "balance" that needed to be struck between budget cuts and measures to boost the meagre economic growth that has returned to France.

Schaeuble seemed pleased. "France knows its responsibilities and this was confirmed today. We don't give each other grades, we know we need each other and Germany needs a strong France. When the responsibility pact was announced earlier this year by President Hollande, Germany said it was a good measure and we support France on this path," he said.

Meanwhile, Olli Rehn, the economics commissioner who just stepped down to campaign for an MEP post, said that France should not be given special treatment compared to other countries just because it is a large economy.

Former Eurogroup chief Jean-Claude Juncker – currently lead candidate of the centre-right in the EU elections – also said that "France should comply to the same rules and agreements that apply to Cyprus, Malta and others".

The head of the German Bundesbank, Jens Weidmann, also said that France is a model for how the new rules on budgetary discipline are applied. "That's why we should insist in pointing out to France its commitments in this regard," he said.

French Socialists bruised in local elections

France's ruling Socialists have suffered a bruising defeat in local elections, with the centre-right claiming victory and the anti-EU National Front making further gains – a possible preview of the upcoming EU elections.

Analysis

France falls victim to EU's economic powers

Being singled out for censure by the European Commission is nothing new for the government of Francois Hollande. But the timing of the latest veiled threat from Brussels could hardly be worse.

EU takes time to ponder tech giant tax

The EU commission published a paper that outlined several options on how to increase tax income from internet companies' activities, but fell short of proposing legislation.

EU commission changes gear on trade

The EU executive seeks new deals with Australia and New Zealand, while aiming to overhaul the global investment protection system. It also wants to screen foreign investments.

EU preparing to screen Chinese investments

The EU is to screen foreign investments to avoid takeovers in sensitive sectors. But the plan, mainly aimed at China, will raise political and technical difficulties.

Investigation

EU bank accused of muzzling watchdog

An ongoing review of the the European Investment Bank's "complaints mechanism" could make the oversight branch less independent and less effective.

News in Brief

  1. Dutch state appeals ban on taking air-polluting measures
  2. May proposes 2-year transition period after Brexit
  3. May to call on EU's 'sense of responsibility'
  4. Catalonia has 'contingency plans' for independence vote
  5. Last German polls confirm Merkel's lead
  6. EU to step up sanctions on North Korea
  7. Tusk calls 'euro summit' in December
  8. Report: May to seek two-year EU transition

Stakeholders' Highlights

  1. Mission of China to the EUGermany Stands Ready to Deepen Cooperation With China
  2. World VisionFirst Ever Young People Consultation to Discuss the Much Needed Peace in Europe
  3. European Jewish CongressGermany First Country to Adopt Working Definition of Antisemitism
  4. EU2017EEFour Tax Initiatives to Modernise the EU's Tax System
  5. Dialogue PlatformResponsibility in Practice: Gulen & Islamic Thought
  6. Counter BalanceHuman Rights Concerns Over EIB Loan to the Trans Anatolian Pipeline Project
  7. Mission of China to the EUChina Leads the Global Clean Energy Transition
  8. CES - Silicones EuropeFrom Baking Moulds to Oven Mitts, Silicones Are a Key Ingredient in Kitchens
  9. Martens CentreFor a New Europeanism: How to Put the Motto "Unity in Diversity" Into Practice
  10. Access MBAGet Ahead With an MBA Degree. Top MBA Event in Brussels
  11. Idealist QuarterlyIdealist Quarterly Event: Building Fearless Democracies With Gerald Hensel
  12. Mission of China to the EUPresident Xi Urges Bigger Global Role for Emerging Economies