France warned on deficit and debt
Brussels says it risks missing recovery targets – and failure ‘could endanger euro-zone’
FRANCE has been warned that it must do more to reduce its budget deficit and debt with the European Commission saying it will miss its agreed target unless it takes strong action.
Despite being given an extra two years to bring the deficit below 3% of GDP, the Commission says France is not living up to its promises and will miss “both headline deficit and structural adjustment targets”.
The Commission also targeted high French labour costs saying the business environment was “unfavourable” with low competition and difficult wage structure meaning companies were not able to be competitive globally.
Brussels warned that if France did not hit its target it was not just its own economy that would be in danger “but the whole of the euro-zone”.
Economic commissioner Olli Rehn said Brussels was not including the proposed “responsibility pact” between companies and unions in its calculations as it was not yet finished and it was not known how it would help boost export businesses.
Along with France, Brussels said that Belgium, Bulgaria, Croatia, Finland, Germany, Holland, Hungary, Ireland, Italy, Slovenia, Spain, Sweden and the UK all had economic imbalances.
Croatia, Italy and Slovenia were the worst and the Commission said it would monitor their progress closely.
French Finance Minister Pierre Moscovici said reforms were on track to make companies more competitive, but the results of cuts in public spending to reduce the deficit would not be felt until 2015-2017.
There was some good news today for his plans and President Hollande as it was revealed that unemployment had fallen slightly in the last quarter of 2013, reducing by 0.1% to 9.8%. Labour Minister Michel Sapin said that this fall was the first since mid-2011 and met Mr Hollande’s promise of a fall by the end of 2013.