BERLIN: France’s new finance minister travelled to Berlin yesterday to defend budget plans to his German counterpart who was upbeat about Paris’ efforts to tackle its budget deficit and spur growth.
Wolfgang Schaeuble, Germany’s veteran finance minister, struck a conciliatory tone in a press conference with Michel Sapin but both said they had not addressed head-on the thorniest issue of France’s public finances during their talks. “Germany needs a strong France,” said Schaeuble, Chancellor Angela Merkel’s fellow conservative champion of budgetary rigour.
“France is on a very good path,” he added, referring to reforms announced by the French government to tackle its stagnant economy and rising unemployment. Schaeuble described his meeting with Sapin, who was appointed last Wednesday in a government reshuffle, as “very good” and said he had been “convinced” by the new minister’s explanations.
He limited his comments on budgetary discipline to saying that he assumed Paris was “aware of its responsibilities” but that “everything musn’t be reduced to one single issue”, of deficit reduction. France has promised to reduce its public deficit from 4.3 percent of national output last year to under 3 percent next year in line with EU rules. But Sapin said last week that he would discuss the “pace” of deficit reduction during talks with EU partners in comments seen as a sign that Paris wants more time to cut spending amid a prolonged economic downturn.
Sapin came to the capital of Europe’s top economy to outline the “difficult” reforms due to be addressed by new Prime Minister Manuel Valls to lawmakers today.
France is seeking to reduce the tax burden on households, lower social contribution payments for businesses and implement €50bn of savings.
Describing himself as a “French Schaeuble”, Sapin pledged to go on straightening out France’s public finances. He stressed France had already made “considerable efforts” which it would “amplify” but not at any cost. He said he sought a “balance” between respecting commitments and greater economic growth, although he acknowledged that he expected “difficulties”, an implicit reference to talks with the European Commission. A German newspaper Monday cited government sources as saying Berlin faced a certain “dilemma” between concern for preserving the credibility of EU budgetary rules and a wish to support Paris’ efforts. “It also doesn’t help us if, for the sake of principle, we stay tough but France in the end is economically washed-up,” the Sueddeutsche Zeitung daily said citing government sources in Berlin. AFP
