Saturday

3rd Dec 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.

Analysis

Doubts hang over EU investment plan's future

Questions of value for money and a lack of transparency complicate adding almost €200 billion more and extending the Juncker investment plan to 2020.

News in Brief

  1. Talks on wholesale roaming rules to start
  2. Lead MEP Dieselgate committee: Italy and Slovakia will cooperate
  3. Transparency NGO sues EU commission on Turkey deal
  4. Pro-EU liberal wins UK by-election
  5. Finnish support for Nato drops, Russia-scepticism grows
  6. Cyprus talks to resume in January
  7. Documents from German NSA inquiry released
  8. Transport commissioner 'not aware' of legal action on emissions

Stakeholders' Highlights

  1. European Gaming & Betting AssociationContinues to Grow its Membership and Welcomes its Newest Member Association
  2. ACCASupports the Women of Europe Awards, Celebrating the Women who are Building Europe
  3. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  4. ECR GroupRestoring Trust and Confidence in the European Parliament
  5. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First
  6. MIRAIA New Vision on Clean Tech: Balancing Energy Efficiency, Climate Change and Costs
  7. World VisionChildren Cannot Wait! 7 Priority Actions to Protect all Refugee and Migrant Children
  8. ANCI LazioRegio-Mob Project Delivers Analysis of Trasport and Mobility in Rome
  9. SDG Watch EuropeCivil Society Disappointed by the Commission's Plans for Sustainable Development Goals
  10. PLATO15 Fully-Funded PhD Positions Open – The Post-Crisis Legitimacy of the EU (PLATO)
  11. Access NowTell the EU Council: Protect our Rights to Privacy and Security
  12. ACCAThe Future of Audit Means Adaption to Today’s Global and Digital World