Friday

21st Sep 2018

Ministers play down French budget row

  • France must stick to the EU's budget rules, Eurogroup ministers warned on Monday. (Photo: consilium.europa.eu)

EU finance ministers played down the prospect of a row with France at their monthly meeting on Monday (13 October), but insisted that the bloc's rules on budget deficits and debts had to be respected.

Speaking with journalists following the Eurogroup meeting, Dutch finance minister Jeroen Dijsselbloem, who chairs the 18-member Eurogroup, conceded that there had been "a little peer pressure".

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"There are clear rules on budgets that have to be followed," commented Dijsselbloem, although he conceded that the EU could not force France to re-write its budget. "In procedural terms the French prepare their own budget ... and they will make their own budget," he said.

"I am confident that the French government will send a strong and sound draft budget," he said.

German finance minister Wolfgang Schaueble remarked that he was “confident that a solution can be found in the case of France,” but that “the European rules exist to be followed".

French finance minister Michel Sapin set out a 'no austerity' budget earlier this month, officially abandoning the 2015 deadline handed by the EU to reduce its deficit in line with the bloc's stability and growth pact.

Its 2015 budget plan is projected to result in a 4.3 percent deficit in 2015, and the economy is not forecast to reach the 3 percent of GDP threshold until 2017.

Both France and Italy have been criticised in recent weeks over the budget plans.

At a conference of business leaders in Rome, Italian prime minister Matteo Renzi announced tax cuts worth €18 billion, alongside €16 billion of new spending cuts. Last month, Renzi raised the target for Italy's 2015 deficit from 1.8 percent of GDP to 2.9 percent, close to the EU limit.

Meanwhile, the incoming economic affairs commissioner, Jyrki Katainen, indicated that EU officials will start examining the figures from Wednesday, the final deadline that countries have to submit their budget plans to the European Commission.

The EU executive will then make its recommendations at the end of the month.

Ministers also discussed ways to boost investment, particularly in infrastructure projects, as a way to stimulate growth.

Dijsselbloem reiterated that reform programmes should be linked to access to EU investment funds, commenting that "we need a mix of structural reforms, investments and monetary policy".

He added that the EU could support extra investment in countries which commit to structural reform programmes that were "front loaded and not just promised".

Schaueble ruled out using the EU's bailout fund, the European Stability Mechanism (ESM), as an investment vehicle, but indicated that the European Investment Bank (EIB) could be given more capital.

“We won’t do this by using the capital stock of the ESM but, where appropriate, by a necessary increase in the capital of the EIB,” Schaueble said. “We have plenty of options".

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