Brussels, 03/07/2007 (Agence Europe) - France has appealed for more “margin for manoeuvre” in balancing its budget, as well as increased economic coordination in monetary and exchange rate matters, and is actually acknowledging this apparent contradiction. In an interview with the Financial Times on Tuesday, Jean-Pierre Jouyet explained: “You have in this reformed stability pact a margin for manoeuvre that can provide more flexibility when you are realising a reform programme that aims to increase the potential growth rate”. The French secretary of state for European affairs believes: “That will not change the face or the nature of the stability and growth pact (SGP)”. He explained that the programme for lowering taxes and social charges, as well as reform of the universities in France, will contribute to greater French competitiveness. The SGP lays down “major reforms that will lead to cost savings in the long term, including an increase in growth potential, that will have a real impact on the long term viability of public finances and which should be taken into account” in the definition of the adjustment trajectory. According to France, taking into account this element could help the country return to a balanced budget by 2012 rather than 2010, as envisaged, in fact, in its updated stability programme (EUROPE 9350) and in its commitment made at the Eurogroup in Berlin (EUROPE 9411).
Mr Jouyet also affirmed that “It is clear that we have to discuss everything that can increase the potential growth rate of the eurozone, including having a dialogue that is normal but discreet on exchange rate policy”. According to Article 11 of the Treaty, the Council of the EU can, in certain conditions, formulate “general orientations” on the exchange rate policy of the Euro, but this has never been the case. In a speech made in Rome on Tuesday, Lorenzo Bini Smaghi, a member of the European Central Bank (ECB) board of governors, stated: “The structure in place in the euro area is in my view a more efficient one” than the division of labour between the USA and Japan. He also railed against declarations made in public by ministers, which often sent out contradictory messages. He declared that “better discipline is required in the preparation of the euro area's position to ensure that a consistent message is sent to its partners”. (ab)