Monday

25th Mar 2019

Sarkozy set to cause division among EU finance ministers

French president Nicolas Sarkozy is set to cause strong divisions among eurozone finance ministers this evening (9 July) when he appears at one of their regular monthly meetings to tell them that France will be two years late to balance its budget.

Mr Sarkozy's announcement that Paris is to delay a commitment to reduce his country's budget deficit to 2012 has raised concerns among other single currency states that the eurozone's rules - known as the stability and growth pact - will be weakened

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Mr Sarkozy's appearance at the euro finance ministers' meeting tonight could see sparks fly (Photo: The Council of the European Union)

The French move comes just a few short months after euro finance ministers in April agreed to balance the books by 2010 - France's previous government had also signed up to the commitment.

Mr Sarkozy's plan is part of an overall "fiscal shock" for the French economy that he announced soon after coming into power.

It includes tax cuts running to billions of euro with an aide to French prime minister Francois Fillon earlier this month saying that the Sarkozy plan would likely see the country's budget deficit run to 2.5 percent of GDP in 2008.

This is perilously close to the 3 percent upper limit defined by the stability pact - the previous French government had promised to cut the budget deficit to 1.8 percent by next year.

Paris's budget plans are already causing divisions among the 12 other euro states. Portugal, as EU presidency, said Mr Sarkozy would face strong "peer pressure" while Germany's Peer Steinbrueck last week said there would be "a problem" if he goes ahead with his plans.

They fear it will set a bad example for other countries who may be tempted to do the same.

Commission anxiously watching

The European commission has also been anxiously watching from the sidelines.

EU monetary affairs commissioner Joaquin Almunia has repeatedly stressed that EU member states must profit from the relatively positive economic climate in Europe to reduce their budget deficits, giving governments more leeway in the event of an economic downturn in the future.

Aside from the economic repercussions of the French decision, it is also seen as stepping into finance ministers' territory.

Mr Sarkozy's appearance tonight is the first time that a head of state will take part in such a gathering sparking concern that not only is French finance minister Christine Lagarde being undermined but also EU finance ministers' standing generally.

"The economy, growth, and full employment are subjects that are so important that heads of government and heads of state must deal with them directly," Mr Sarkozy told France's Journal du Dimanche in an interview.

Mr Sarkozy has also indicated that his foray into the economic brief is not a one-off act.

This evening he is also set to call for an EU summit on economic policy after the summer break.

His views on increased economic governance in the eurozone have already caused controversy, he has pushed for a higher profile for eurozone finance ministers to counter the weight of the European Central Bank.

This has been met with alarm in Germany which is adamant that the ECB should be kept independent of politics.

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Join EUobserver

Support quality EU news

Join us