Thursday

17th Aug 2017

France warned to respect euro rules

France was on Wednesday warned to stop challenging the rules underpinning the euro or risk causing long-term harm to the single currency, the Financial Times reports. Nikos Christodoulakis, who chairs the Ecofin council of European Union finance ministers, said if France failed to respect the stability and growth pact, it would send a damaging signal to countries waiting to join the euro.

The finance minister of Greece, holder of the EU's rotating presidency, warned that the dispute over the pact was distracting Europe from tackling the more serious problems holding back its sluggish economy. He indicated that without radical economic reforms, the EU would miss its target of becoming the world's most competitive economy by 2010.

Open defiance

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France last week came out in open defiance of the pact, refusing to accept a demand by the other 14 EU finance ministers at the Ecofin meeting that it cut its deficit to "close to balance" by 2006. Francis Mer, French finance minister, said the deficit would be cut "at our own rhythm", indicating he could miss the 2006 deadline.

In an interview with the Financial Times, Mr Christodoulakis said that this attitude sent a "wrong signal" to all other eurozone countries, and those waiting to join, like Sweden and Denmark.

Mr Christodoulakis is frustrated that the dispute over the stability pact is diverting attention from the need for structural reforms in the EU economy.

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Greece could issue 3-year bonds as early as this week, for the first time in three years, amid mixed signs from its creditors and rating agencies.

Greece to get €7.7bn loan next week

The ESM, the eurozone emergency fund, agreed on Friday to unblock a new tranche of aid as part of the bailout programme agreed upon in 2015.

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