The European Commission granted a further period of two years to France on Wednesday to bring its public deficit to the objectives of the single currency below 3% of its GDP, ie in 2017, in an election year.
“We decided to propose a new recommendation to France on how to treat excessive deficit and set a new deadline for reducing it to less than 3%, this is in 2017, “said Vice President of the Commission, Valdis Dombrovskis, in a press release.
This is the third time that France gets a new term to bring its public deficit to European standards. With this new term must do so in an election year, or risk possible sanctions from the Commission.
The French government expects a deficit of 4.1% in 2015, instead of 3% initially agreed, and a return below 3% since 2017.
Brussels had until March to France, Italy and Belgium to adapt, through reforms and cuts, budgetary targets set by the Stability and Growth Pact Europe, which sets a maximum deficit of 3% of GDP and public debt at a maximum of 60% of its gross domestic product.
This implies that if not corrected developments, the Commission may adopt any “measures under the excessive deficit procedure”. In theory, the Commission may financially punish countries that fail to conform to the rules.
In the case of Italy and Belgium, the Commission indicated that continue with a level of concern debt.
France, the second largest economy in the euro zone was the most emblematic. Already obtained postpone deadlines twice during President Nicolas Sarkozy and during the current term of François Hollande.
The Committee hopes that France present in April, “a national program of ambitious and detailed reforms” to help reduce the deficit, said Commissioner for Economic Affairs, Pierre Moscovici, he recognized as “steps in the right direction” plan reforms already introduced Paris. France “should continue” reforms, he said, adding that the Commission decided to “raise a step” the pressure on Paris to relaunch its economy, characterized by “the deterioration in competitiveness” and a “high debt”.
“If it turns out that the reform agenda is not credible, we may (…) impose a plan of corrective reforms,” he said.
The French Prime Minister, Manuel Valls, and the Finance Minister Michel Sapin, reacted to this announcement confirming that France will meet its deficit target in 2017 and will continue with reforms
-. France, more complicated case –
In practice, France must adjust its budget cuts equivalent to 0.5% of GDP instead of 0.3%.
And the penalties remain on the table. “Sanctions are an option,” said Moscovici, “but they are always the sign of a failure, for whom imposed to those who receive them.”
“The case of France was the most complicated” Dombrovskis acknowledged that rejected in a press conference suggestions laxity of the Commission against France, second bloc’s economy, and hardness versus small countries such as Greece, which on Monday had to bow to the reforms demanded him Eurogroup partners in exchange for financial support.
Dombrovskis admitted that the debate on Wednesday of the 28 commissioners on national budgets was “very detailed, intense.”
According to a European source, Dombrovskis, exprimer Latvian Minister fervent advocate of fiscal orthodoxy, asked even during the conclave of the commission headed by Jean-Claude Juncker initiate the procedure for sanctions against Paris, which had been an unprecedented situation in the EU.
About Spain, which was also discussed, the Commission considers that remains at risk of inclumplir its objectives. The government has until 2016 to correct its deficit. This year should reach the target of 4.2%, but according to the latest projections from the Commission, the deficit will be 4.6%. “We believe that we must encourage reform effort of the Spanish Government and retain the same recommendations” made by the Commission in November, Moscovici said.
For Spain, the Commission notes “relative to high risk public debt and private sector “and emphasized that the lack of international investments” continues to merit attention in a context of very high unemployment. “
Hit by the debt crisis, Spain undertook a historic effort austerity to reduce its public deficit. In 2012, it was 10.6% last year stood at 7.1%, and this year, the Commission projected a 5.6%
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