Brussels, 27/08/2014 (Agence Europe) - The French prime minister, Manuel Valls, told a French employers' (MEDEF) summer school on Wednesday 27 August that France would continue with its programme of structural reforms and reducing public debt.
Valls said there had to be a reduction in public deficits in Europe in general and France in particular and that France had been living beyond its means for 40 years. He reminded his audience that France had committed to saving €50 billion by 2017, €21 billion of it next year.
Echoing statements made by the French president, François Hollande, Valls said that the speed at which deficits are reduced has to be adjusted to suit the exceptional situation facing Europe. The French economy stagnated in the first half of this year and the French authorities have admitted that the public deficit will be above the 4% of GDP mark in 2014, jeopardising achievement of the 2015 target of 3%.
On the same day, the European Commission said it was important for the new French government to keep up the reform momentum. A spokesman for Euro Commissioner Jyrki Katainen said there was no time to waste and it was urgent for France, and other countries, to speed up reforms to boost competitiveness and jobs in a strong and sustainable manner. He pointed out that the Commission said in the spring that France was achieving the public deficit reduction in structural terms (in other words, ignoring the effect of the economic cycle).
Over-valued euro. The French prime minister made a positive assessment of the European Central Bank's decisions and statements on tackling low inflation, but said the euro was “over-valued”, despite its 6% fall against the dollar since April. The French leader said the ECB had taken action to deal with the risk of deflation, but had to do more and act more speedily.
Valls called for broad eurozone support for domestic demand. He said the European Commission should commit to public and private investment. In this connection, he mentioned the package of €300 billion over three years announced by the next president of the Commission, Jean-Claude Juncker, saying that the details needed to be put in place. Valls suggested this money could be used for jobs for young people, the digital agenda, the environment and big infrastructure projects.
Valls was addressing French business leaders the day after he formed a new government. He had resigned on Monday following deep disagreement within the government over the direction of economic policies. Former economy minister Arnaud Montebourg had criticised the economic austerity dogma imposed by Europe. Montebourg has been speedily replaced by Emmanuel Macron. Finance minister Michel Sapin has kept his job. (MB)