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Euro area questions leniency over France’s deficit goals

10 March 2015 15:21 (UTC+04:00)
Euro area questions leniency over France’s deficit goals

By Bloomberg

Euro-area finance ministers accused the European Union’s economy chief of double standards over a decision to grant France an additional two years to comply with the EU’s budget rules, a European official said.

Finance chiefs from Spain and Ireland said Economy Commissioner Pierre Moscovici showed a lack of evenhandedness after the EU last month gave France until 2017 to reach its deficit target, said the official, who asked not to be named because the talks are private.

France, the euro zone’s second-largest economy, now needs to heed the European Commission’s call for more action, Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area ministers’ group, told reporters on Monday in Brussels.

“Some countries said there should be less flexibility” in the application of the EU’s spending rules, “some said there should be more flexibility,” Dijsselbloem said.

France has exceeded the EU’s deficit target of three percent of gross domestic product for seven consecutive years as it has struggled through recession, low growth and unemployment of over 10 percent. During this period, other nations have pushed through spending cuts and liberalization laws.

The EU commission decided last month not to take the unprecedented step of imposing sanctions for the breach.


‘Effective Action’


The EU must have evidence that a government has already taken “effective action” if it wants to grant a country more time, and it’s not clear this happened in France’s case, a second euro-area official said.

France’s program of spending cuts and reforms “is a demanding one,” Moscovici told reporters. “The commission, I can assure you, will be extremely diligent in monitoring its implementation because it is a question of credibility.

Euro-area and other EU finance ministers meeting Monday and Tuesday are discussing whether to endorse the decision.

In addition to having to bring its deficit below three percent in 2017, France must also cut its structural deficit by 0.5 percentage points this year, according to the commission findings.

‘‘You can look at the French extension in two ways,’’ Dijsselbloem said. ‘‘One way is yes, they get extra time, that happened to many countries, including France before; but they also have a quite a task.’’

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