Wednesday

15th Aug 2018

MEPs ask Moscovici about French deficit

  • France will be a litmus test for the new EU commission's rigour on deficit and debt (Photo: Moyan Brenn)

MEPs gave French commissioner Pierre Moscovici a Tuesday (7 October) deadline for extra questions about his commitment to EU's fiscal rules and how he will deal with his home country, amid reports that Brussels is likely to reject France's latest budget.

The 22 questions press the former French finance minister on his new role as an economics commissioner in charge of giving fines or longer deadlines for countries to meet the EU rules on deficit and debt.

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"What action should apply to members whose deficit is constantly above 3% of GDP and which had already been granted an extension of the deadline to bringing down the deficit to Maastricht levels? Under which circumstances would you argue for more time or for applying sanctions?" MEPs ask.

The same question is asked for countries with a public debt above the EU threshold of 60 percent of gross domestic product.

The extra questionnaire comes after a rocky hearing last week in the European Parliament's economics committee, when MEPs repeatedly asked Moscovici why he would be fit for the commissioner post when as a finance minister he failed to get France back on track.

France last week unveiled its 2015 budget with a deficit of 4.3 percent. It is to reach the three-percent deficit target only two years later than what it had agreed with the EU. Its public debt will reach a record of 98 percent of GDP next year, also well above the EU target.

According to senior commission sources quoted by the Wall Street Journal, the EU executive is about to reject France's budget, since it conflicts with what they had agreed last year, when Paris was given another deadline extension.

“People are ready to let the big boys in Brussels reject the budget,” a European official told the US paper.

France will be a litmus test not only for Moscovici's allegiance, if he is to become the next economics commissioner, but also for how EU's revamped economic scrutiny works when it comes to big member states.

Back in Paris, however, this message does not seem to have arrived yet. In an interview with the Financial Times, French finance minister Michel Sapin said he was hopeful of persuading the incoming European Commission to accept the new delay.

He insisted that France was not abandoning budgetary rigour, pointing to plans to save €50bn over three years and cutting public spending by 0.2 percent a year.

“Public spending is still money in the system. If you remove it, you can cause a shock. €50bn marks the balance between budget responsibility and causing too great a recessionary effect,” Sapin said.

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