EU - France in hot seat over deficit at finance chiefs meeting

11th February 2008, Comments 0 comments

France faces pressure this week from its EU partners as Paris tries to get more leeway from European finance ministers

   BRUSSELS, Feb 11, 2008 - France faces pressure this week from its EU
partners as Paris tries to get more leeway from European finance ministers on
cutting its deficits amid weakening economic growth, diplomats said.
   Eurozone ministers have to agree Monday on how much room for manoeuvre to
give Paris on its deficit, a decision likely to be endorsed the following day
by their colleagues from the rest of the European Union.
   Tough talks are expected, with one diplomat noting that as of Friday aides
had not worked out a preliminary compromise with some countries calling for
taking a hardline against France.
   "I expect there will be a certain need for discussion," another diplomat
said. "There are certain problems and questions concerning the French
   The European Commission, which polices its members' public finances, called
on Paris last month to be "more ambitious" and step up the pace of its efforts
to reduce the French public deficit to avoid breaching EU rules.
   France is predicting that its deficit will fall to 2.3 percent of gross
domestic product this year and 1.7 percent next year, but at that rate it is
unlikely to balance its books before 2012.
   However, last April the eurozone nations -- numbering 15 since Cyprus and
Malta joined on January 1, 2008 -- set themselves the goal of balancing their
budgets by 2010 at the latest.
   France is eager that there is no mention of 2010 in the ministers'
conclusions, but the prospect that Paris will miss that deadline has angered
some of its more frugal partners, who have worked hard to improve their
   Given the slowing economic growth and a likely fall in tax revenues, France
is hoping that "the way the mid-term objective is reached can be debated," a
French official said.
   Outspoken Netherlands Finance Minister Wouter Bos said last week that the
French "have total disregard for European rules."
   "These rules apply to the small countries just like the big countries and
so France," he told Dutch television RTLZ.
   Even the usually Francophile chairman of eurozone finance ministers'
regular meetings, Luxembourg Finance Minister Jean-Claude Juncker, said last
week that "France cannot unilaterally change the timetable."
   He told French business newspaper Les Echos that although he did not
entirely share the European Commission's concerns, that "France will have to
make further consolidation efforts".
   A diplomat said that Germany, traditionally a big defender of fiscal
discipline, "agreed with the Commission recommendations" and that "other
member states also agreed" with Brussels.
   With the French, German, Italian and British ministers as well as Juncker
in Tokyo on Saturday for a G7 meeting, there was an opportunity to try to
hammer out an informal compromise before the meetings in Brussels.
   "Maybe there will be enough of them to be able to resolve the problem
informally," an EU official said.
   France could find some support from Italy which the Commission also said
last month needed to be more ambitious about improving its public accounts.


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