Monday

26th Sep 2016

France pressured on EU deficit targets

EU finance ministers meeting in Luxembourg on Tuesday (5 June) urged France to stick to its EU deficit reduction targets amid concerns about the implications of president Nicolas Sarkozy's tax-cutting plans.

The head of the 13-nation euro group, Jean-Claude Juncker, reminded France of its obligations under the rules governing the euro.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"France clearly must conform to the growth and stability pact, all its good and bad ideas have to fit with the rules of the pact," he said according to French daily Liberation.

Mr Juncker's warning is in response to plans announced by Mr Sarkozy last month to give the country a "fiscal shock" by undertaking a series of tax-cutting measures likely to cost up to €20 billion.

The proposed measures include almost entirely scrapping inheritance tax and cutting tax on overtime.

The announcement came at a time where France's projected deficit for this year is 2.4 percent.

This is under the red line set by the EU where deficits have to kept below 3 percent of GDP but not far enough under for France to be complacent, believe officials.

On top of this, France has promised to reduce its structural deficit by 0.5 percent per year - this was a part of the 2004 reform of the stability pact which said that during periods of growth, eurozone countries should reduce their structural deficit.

Paris, along with all other member states, has also agreed to balance its budget by 2010.

If Paris goes off track it would send a poor message to other member states and would reinforce the belief that big countries can bend the rules as they wish.

For the moment, however, finance ministers are waiting for France's parliamentary elections before giving their final verdict on the Sarkozy plan.

"We must await the installation of the new French government, which means waiting for the end of the day on 17 June and I don't doubt for one moment that France will be able to satisfy the requirements of the stability pact, but we'll have more details in July," said Mr Juncker, according to euronews.

French finance minister Jean-Louis Borloo - attending an EU finance ministers meeting for the first time - countered the worries.

"We want the confidence shock in France to also be a confidence shock for our partners.''

The same meeting also saw ministers unanimously agree that Malta and Cyprus can adopt the euro at the beginning of next year.

Investigation

Diesel cars still dirty, despite huge EU loans

The European Investment Bank lent billions to carmakers, in part to clean up diesel cars. But diesel cars are still dirty, prompting questions if the money was well spent.

EU redoubles attack on roaming charges

After an embarrassing U-turn last week, the EU commission has proposed to abolish roaming charges by June next year. Only "abusive" clients to pay.

Stakeholders' Highlights

  1. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  2. HuaweiAn Industry-leading ICT Solution Provider and Building a Better World
  3. World VisionUN Refugees Meeting a Wasted Opportunity to Improve the Lives of Millions of Children
  4. Belgrade Security ForumCan Democracy Survive Global Disorder?
  5. YouthProAktivEntrepreneurship, Proactivity, Innovation - Turn Ideas Into Action #IPS2016
  6. GoogleTrimming the Waste-Line: Weaving Circular Economy Principles Into Our Operations
  7. Crowdsourcing Week EuropeDon't Miss the Mega Conference to Master Crowdsourcing, Crowdfunding and Innovation! 10% Discount Code CSWEU16
  8. Martens CentreFighting Terrorism: Do we have what it takes? 26 September, Brussels
  9. ACCAKaras Report on Access to Finance for SMEs in a Capital Markets Union
  10. Centre Maurits Coppieters"I still believe we can change Europe" Said David Grosclaude
  11. World VisionThe Child Protection Index to be Launched in Brussels on 28 September 2016
  12. HuaweiDigital Transformation: Unleashing Europe’s Potential