Brussels, 04/03/2015 (Agence Europe) - On Wednesday 4 March, the French President, François Hollande, announced “new savings” in the order of €4 billion for 2015, to allow France to comply with its commitment to bring down its structural deficit (not including economic effects) by 0.5% of GDP.
“If Brussels is asking for an extra four billion to respect our commitments to reduce our public deficit, we will have to find this money with new savings”, the French head of state said in an interview published on Wednesday by Le Parisien/Aujourd'hui en France.
This announcement comes with the Eurogroup meeting of Monday 9 March to discuss the budgetary and macro-economic situation of the countries of the eurozone and, in particular, the recent recommendation of the European Commission to the Ecofin Council to give France a conditional further grace period of two years (from 2015 to 2017) to bring its public deficit under the 3% of GDP mark (see EUROPE 11262 and 11263).
However, it will be a steep curve for Paris. The Commission is asking the French government to reduce its public debt to 4.0% of GDP in 2015 rather than the 4.1% forecast by the Valls government, and then to 3.4% of GDP in 2016, instead of the 3.6% forecast by Paris and, lastly, 2.8% of GDP in 2017. For 2015, France is asked to announce additional structural measures in the order of €4 billion.
In the interview, Hollande reiterated his promise not to raise taxes “for the years 2015, 2016 and 2017” and stressed that reduced charges for business would continue.
On a visit to the headquarters of the European Commission on Wednesday, the German Chancellor, Angela Merkel, praised France, stating that the second-largest economy of the eurozone is “on the right track”. She described the process of reforms in France as “highly intensive”, going no further than to take note of the Commission's recommendation on the new trajectory for the reduction of the French deficit.
Speaking to the newspaper El País, the President of the Commission, Jean-Claude Juncker, made no bones about the fact that “several countries, including those of the South, (had) criticised the decision” of the Commission. He went on to say that France was not too enthusiastic about the idea of changing its budget to comply with its commitments. “One might have the impression that France has received a present, but it's a poisoned present”, he said, adding that financial sanctions against Paris was still “a possibility”. He went on to say that the reforms in France are “insufficient”, like the 'Macron' law to liberalise the economy. (Mathieu Bion)