Tuesday, October 7, 2014

The three scenarios of budget battle between France and Europe – The World

The three scenarios of budget battle between France and Europe – The World

The World | • Updated | By

The reason: the persistence of the famous French deficit above the 3% of gross domestic product (GDP), despite two years of deadline in 2013 in Paris to return to the nails by 2015 Now, France does not intend to meet this target by 2017, against the opinion of the European Commission which wants to force Paris to cut faster and strong public spending, while operating the strusturelles reforms that would restore the competitiveness of the second largest economy in the euro area.

Tension rose several notches in recent weeks as the government French unveiled its draft Finance Bill 2015 The document must be sent to Brussels by 15 October. The Commission will in principle until the end of November to assess whether it is consistent with the Stability Pact and growth.

The teams of the commission – DG ECFIN, which examines national budgets, those of Jean-Claude Juncker, the future president of the Commission (theoretically starting Monday, November 3) – are already in contact closely with the Elysee to find a solution. “Clash” between Paris and Brussels, concessions Paris, Brussels or sanctions, what are the possible scenarios for the coming weeks?



Francois Hollande and Jean-Claude Juncker in June 2012
  • Hardening: Brussels asks Paris to review its

The European Commission, the guardian of the stability pact, currently sends clear messages to Paris: in the current state, the draft budget law “does not pass the bar,” do you know in Brussels. Indeed, the French public deficit would be 4.4% of GDP in 2014 and again in 2015 by 4.3% worse in the eyes of the Commission, the account is not there at all in terms of deficit structural (which does not take into account the impact of economic conditions on public accounts). Paris is committed to a structural adjustment of only 0.1% in 2014 and 0.2% of GDP in 2015, while the treaties set a target of 0.5% minimum.

It should find some 8 billion more in savings, either in taxes or increases in spending cuts – freezing of pensions, salaries, etc.-to be in the nails of the “structural” effort required by the European authorities. . Measures very high political risk for the Prime Minister Manuel Valls and President François Hollande

For the moment, the French leaders are standing their ground: it does not change the draft budget law ( PLF). Finance Minister Michel Sapin, has repeated again Tuesday, October 7 in the morning on RTL: “ France will not make savings in 2015 in addition to the € 21 billion already provided for in the draft budget and does not intend to either raise taxes. “ Prime Minister Manuel Valls said he was ‘optimistic’ on the ability of France to convince Brussels that it can not ” go further “ in reducing public expenditure

If the French are inflected by their speeches and their copies in ten days -. by basically sending the PLF in Brussels, October 15, and if the Commission is sticking to its position, then it should require Paris to see his copy before the draft finance bill is passed by the French parliament. And, under powers never used at this stage, but charge for the year by the government of Nicolas Sarkozy, at the height of the crisis in the eurozone.



French Finance Minister Michel Sapin (L) chats with French Treasury director general Bruno Bezard (R) DURING a press conference Following a meeting with Ministers from member Countries of the West African franc zone in Paris on October 3, 2014 AFP PHOTO / DOMINIQUE FAGET<br /> “Title =” AFP / DOMINIQUE FAGET “onload =” lmd.pic (this); “onerror =” lmd.pic (this); “class =” lazy-retina “/> <figcaption class = The future president of the European Commission, Jean-Claude Juncker in Brussels on September 10
  • The transaction: a new deadline against reforms

This is most likely at this point, although it should not go without very tense negotiations. Jean-Claude Juncker, the future President of the Commission – from early November – “would not begin his tenure with an open kitchen with a large capital crisis,” ensured a European source, Monday, Oct. 6. In this case, both parties would have a few weeks to find a common ground.

Read also: Entering stretched material for Juncker Committee MEPs face

With a goal grant an extension to France in return for a comprehensive structural reforms to adjust, effectively its budget problems Plan. Paris will then forward a plan for more specific reforms, more reasoned and better encrypted. Give a “timing”, for example, reform of regulated professions.

The negotiations will last for weeks, until the publication of “ the opinion of the Committee on the Budget Bill French “, by the end of November. The document, then submitted to finance ministers of the euro area, should then include detailed commitments Paris on reforms.

This review, which requires the member countries will most likely be made jointly by the former French finance minister Pierre Moscovici, future Commissioner to the economy, and the Latvian Valdis Dombrovskis, future Vice -president responsible for the euro. Both men have promised to respect the rules of the stability pact, while applying the “flexibilities” it provides. They still have three weeks, with Jean-Claude Juncker, to clarify their intentions, according to the pledges given by the government of François Hollande.

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