Thursday

7th Jul 2022

Hollande 'grateful' for two-year extension on deficit

French President Francois Hollande, battling record unpopularity, a weak economy and high unemployment, on Wednesday (15 May) attempted to change the narrative of a country and president helplessly buffeted by outside forces and demands.

In Brussels exactly one year after he was inaugurated and following news that France has returned to recession, Hollande emphasized that Europe as a whole was in malaise and not just its second largest economy.

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"For some months countries have been in recession. For some years, others have. All member states are affected. France, as others, is also affected."

With Brussels insistently wagging its finger at Paris saying that its lack of reforms and lack of competitiveness is a threat to the whole of the eurozone, Hollande also sought to show he was the one in charge of domestic economic decision-making.

"We in France have carried out a lot of reforms over the last year. We have moved quickly. But we still have to carry out further reforms. Not because the European Commission is asking us to do so but because it's in our interest."

He said he was "grateful" France had been offered two years leeway to get its budgetary house in order. EU rules say the budget deficit must not be greater than three percent of GDP - a target France is set to miss this year. Meanwhile, the country's debt is set to exceed 93 percent of its GDP by the end of 2013. The EU sets a debt limit of 90 percent of GDP.

European Commission president Jose Manuel Barroso, for his part, played down a media interview he gave earlier on Wednesday calling for France to carry out "credible reform" insisting that journalists were making too much of the word "credible."

"Our starting point is good faith," said Barroso.

Any expectations Brussels has of France will be revealed next week (29 May), when the commission lays out its country-specific reforms report - a detailed exercise pointing to structural and competitiveness weaknesses in a country, and the changes it needs to make.

It will show the reforms that the commission thinks are "essential" said Barroso, noting that Hollande had in their meeting outlined the reforms already made and what he considered to be priorities.

On the difficult relations with Germany - highlighted by a poll released Tuesday which emphasized the different political and economic views of the two countries' populations - Hollande said he was against building up a front against Germany with more like-minded states such as Italy.

"That would not promote the interests of Europe."

But in reference to Berlin's strong stance on fiscal prudence, Hollande said cutting budget deficits too quickly does not lead to growth.

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