Brussels, 21/08/2014 (Agence Europe) - As economic stagnation is preventing France from complying with its budgetary commitments, the French President, François Hollande, has repeated his call for all of the flexibility in the Stability and Growth Pact to be applied.
“I am not asking for the rules to be changed, but for the rules to be applied with all of the flexibility provided for by the treaties in the event of exceptional circumstances. We are in this situation”, he said in an exclusive interview with the daily newspaper Le Monde published on Thursday 21 August (our translation). Whilst maintaining the objective of bringing down the public deficit, he supported the French calls for the pace of budgetary consolidation to be brought into line with the “exceptional” situation, characterised by low growth and extremely low inflation (see EUROPE 11136).
The French economy stagnated in the first quarter of 2014 to the extent that the French deficit is expected to go above the 4% mark this year, rather than the current target of 3.8%. Annual inflation in the Eurozone stands at 0.4%, the lowest level since October 2009.
In late June, the European Council argued that the economic policies of the EU should “foster growth, increase investment, create more and better jobs and encourage reforms for competitiveness”. “This also requires making best use of the flexibility that is built into the existing Stability and Growth Pact rules”, it stressed in its strategic agenda for the next five years (see EUROPE 11110). (MB)