Germany patient with France on deficit
BERLIN (AFP) – Germany will accept a higher-than-permitted public deficit in France for this year if Paris can credibly show it will stick to European Union rules in 2014, the Spiegel newsweekly reported on Sunday.
On Friday, the European Commission slashed its 2013 growth forecast for France to 0.1 per cent and said the deficit would come in at 3.7 per cent, higher than the three-per-cent ceiling allowed under EU rules.
French Finance Minister Pierre Moscovici has said the “conditions were right” for seeking more time from Brussels to get its deficit below the three-per cent limit.
But this has sparked a split in the European Commission, said Spiegel, with some pushing for France to be given such a delay, others pushing for Brussels to stand firm and impose austerity measures.
Some in Brussels think France still has plenty of fat to trim from its bloated public sector, said Spiegel.
However, Germany, Europe’s top economy and political powerhouse, believes that Paris should be let off the hook “if France can credibly prove they will stick to the limit next year,” said Spiegel, citing a top official.
Berlin does not believe this would damage the credibility of EU rules, the newsweekly added.
In 2003, Germany and France teamed up to reject demands from the European Commission that they get their budgets in order.
Many analysts believe this weakening of the EU’s fiscal rules, known as the Stability and Growth Pact, sowed the seeds of the current debt crisis that has propelled the 17-nation eurozone into a bitter recession.