French President Francois Hollande’s insistence that the EU executive can’t “dictate” reforms to France has outraged Angela Merkel’s conservatives.
France’s attitude can undermine efforts to bolster the eurozone economy
Unveiling reform recommendations for the 27-nation European Union on Wednesday, the European Commission urged Hollande to rein in public spending, revamp pensions and cut labour costs in return for a two-year reprieve on budget deficit cuts.
French officials broadly welcomed the recommendations as being in line with reform plans already sent to Brussels. But Hollande, who was on a trip through rural France with reporters, warned the Commission not to overstep itself.
“The European Commission cannot dictate what we should do, it can only say that France must balance its public finances,” said Hollande, who later returned to Paris to prepare for Merkel’s visit to the French capital yesterday.
With concern growing in EU economic powerhouse Germany that the euro zone’s second largest economy is slipping deeper into decline, Merkel allies immediately warned that France’s attitude could undermine efforts to bolster the eurozone economy.
“It can’t work when a big country like France said it can do what it wants to do,” Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democrats.
“If a country in the EU and eurozone thinks it needn’t keep promises, that is worrying,” he added.
Norbert Barthle, the party’s spokesman on budgetary matters, accused Hollande, whose poll ratings have fallen faster than for any modern French President as the economy has slid into recession, of playing to a domestic audience.
He said the EU Commission had already been too generous in giving France a further two years to bring its budget deficit below the bloc’s three per cent ceiling after Paris said it would miss the target this year.
“France won’t be able to bank on such indulgence again,” he said.
Paris says it expects to bring its deficit back under the upper limit in time for the new 2015 deadline and is already preparing to reform France’s generous pension system.
Hollande, who is particularly wary of upsetting negotiations on the issue, said earlier this month the French should expect to have to work “a bit longer”.
He is looking more towards a possible increase in the period of pension contributions that French workers must make rather than any increase in the statutory retirement age.
Yet the Commission specifically listed an increase in the retirement age as a measure that France should examine, and warned it not to do anything which would increase the cost to its companies – remarks which had French officials bristling privately after they emerged.
Merkel and Hollande are at pains to insist that Franco-German cooperation, one of the historic drivers of European Union integration, is working well.
“Our relations are very regular, very normal and very efficient,” a diplomatic source in Hollande’s office said.