France urged to cut budget deficit

BRUSSELS – The European Commission renewed pressure on France to stick to a timetable for cutting its budget deficit, saying the French economy would benefit if Paris used a current economic upswing to balance the books.

Finance ministers of the 13 euro zone countries, including France, agreed in April to balance their budgets by 2010. But soon after Nicolas Sarkozy was elected French president in May, his new government said the country’s budget would be balanced in 2012 and its deficit-cutting would be less ambitious than promised in order to boost economic growth.”The rules are quite clear and more importantly the benefits are quite clear,” Commission spokeswoman Amelia Torres told reporters on Wednesday, noting how budget tightening by other EU countries helped to bring about a pick-up in growth.Sarkozy was due to explain his economic plans today when he makes an appearance at a monthly meeting of euro zone finance ministers, an unprecedented step by an EU leader.He is expected to argue that France should be allowed to delay cuts in the deficit, because it will be implementing structural reform, a situation envisaged by the EU budget rules.The European Commission, which oversees the EU budget rules that underpin the euro, last week expressed concern about Italy’s plan to slow the pace of its budget deficit cuts.Torres, asked about France’s budget plans at a daily Commission news briefing, reiterated that under EU budget rules it was not enough for countries to keep deficits below a ceiling of three per cent of GDP and shortfalls should also be cut by 0,5 per cent yearly towards achieving balance.France and many other euro zone members need to prepare themselves for a future economic downturn by cutting their deficits, Torres said.This would help countries avoid excessive deficits of more than three per cent of GDP at a time of economic stagnation, as was the case in France and Germany early in the decade.”Rather than collision or confrontation we should talk in terms of general interest and the interests of France, growth and job creation,” Torres said.Structural reforms might be taken into account as an excuse to delay required deficit cuts if the reforms increased potential growth and translated into future savings, as for example with pension reforms, she said.Nampa-ReutersBut soon after Nicolas Sarkozy was elected French president in May, his new government said the country’s budget would be balanced in 2012 and its deficit-cutting would be less ambitious than promised in order to boost economic growth.”The rules are quite clear and more importantly the benefits are quite clear,” Commission spokeswoman Amelia Torres told reporters on Wednesday, noting how budget tightening by other EU countries helped to bring about a pick-up in growth.Sarkozy was due to explain his economic plans today when he makes an appearance at a monthly meeting of euro zone finance ministers, an unprecedented step by an EU leader.He is expected to argue that France should be allowed to delay cuts in the deficit, because it will be implementing structural reform, a situation envisaged by the EU budget rules.The European Commission, which oversees the EU budget rules that underpin the euro, last week expressed concern about Italy’s plan to slow the pace of its budget deficit cuts.Torres, asked about France’s budget plans at a daily Commission news briefing, reiterated that under EU budget rules it was not enough for countries to keep deficits below a ceiling of three per cent of GDP and shortfalls should also be cut by 0,5 per cent yearly towards achieving balance.France and many other euro zone members need to prepare themselves for a future economic downturn by cutting their deficits, Torres said.This would help countries avoid excessive deficits of more than three per cent of GDP at a time of economic stagnation, as was the case in France and Germany early in the decade.”Rather than collision or confrontation we should talk in terms of general interest and the interests of France, growth and job creation,” Torres said.Structural reforms might be taken into account as an excuse to delay required deficit cuts if the reforms increased potential growth and translated into future savings, as for example with pension reforms, she said.Nampa-Reuters