Monday

30th Jan 2023

Budget deficit over limit admits French government

The French government admitted yesterday for the first time that its budget deficit would exceed three per cent of gross domestic product (GDP), breaching the limit set by the European Union's stability and growth pact. According to the Financial Times, French prime minister Jean-Pierre Raffarin told business leaders that it was "probable France's budget deficit exceeded 3 per cent as early as 2002".

Mr Raffarin hinted that the deficit would also remain high this year, and could stay above three per cent, however he assured business leaders that no austerity measures would be taken.

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"I won't conduct a policy of austerity," the prime minister said, according to the FT. "When growth is uncertain you do not lower spending more than necessary. That would depress the economic climate even further," he added.

France, Britain and Germany, the three biggest EU economies, have called recently for the Commission to make the rules more flexible to take into consideration the possibility of war in Iraq and the tough economic climate. The Commission on the other hand has repeatedly said the rules should not be relaxed in spite of the tough economic climate and the likelihood of a war in Iraq.

The Commission is prepared to take further action against France if the final figures made available confirm the high deficit predictions. "If the deficit notified by France exceeds 3% then the Commission will have no choice but to prepare a report in conformity with excessive deficit procedure," Commission spokesman, Gerassimo Thomas, told Le Monde.

EU 15 argue over stability pact flexibility

Germany, Britain and France want to make the controversial growth and stability pact rules more flexible, but this plan is facing a stout resistance as almost half of the EU member states have expressed their doubts about this reform, reports the Financial Times. The Commission has proposed a plan, under which countries with sound economies would be given rewards, while those with high debt and persistent deficits would face no mercy.

France teeters at stability pact limit

France is teetering on the very brink of breaching the Growth and Stability Pact, the rules governing the management of the euro.

Officially, however, the Commission does not have to react for several days – up to three weeks – so that the European statistics office, Eurostat, has time to verify the French accounts.

Analysis

Why is petrostate UAE going all in on green hydrogen?

The United Arab Emirates announced its ambition to become one of the world's premier trading hubs for green hydrogen. Interesting, to say the least, for a country that relies on the sale of fossil fuels for its prosperity.

Analysis

Why is petrostate UAE going all in on green hydrogen?

The United Arab Emirates announced its ambition to become one of the world's premier trading hubs for green hydrogen. Interesting, to say the least, for a country that relies on the sale of fossil fuels for its prosperity.

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