The European Commission is likely to reject France’s 2015 budget draft at the end of October and ask for a new one that would better reflect Paris’s deficit reduction obligations under European Union rules, several eurozone officials said yesterday.
It would be the first time the EU executive exercises its power to demand changes to a national budget draft under new prerogatives that EU countries granted the Commission in 2013.
The Commission is also likely to step up the disciplinary procedure against France to the final stage before fines while at the same time granting Paris the extra two years it wants to bring down its budget shortfall within EU limits.
It would save face for everybody
The decisions, some of which will be taken by the outgoing Commission before a new team led by Jean-Claude Juncker takes office in November, would give France more time while upholding the credibility of the recently toughened EU budget rules, one eurozone official with insight into the process said.
Such a solution would also help the designated commissioner in charge of policing budgets, French Socialist Pierre Moscovici, to prove he will not give preferential treatment to his own country, as many centre-right members of the European Parliament suspect.
Moscovici was ordered to submit written replies by today to detailed questions on how much flexibility he would give to countries that repeatedly breach EU fiscal rules after lawmakers found his answers at a hearing last week evasive.
“It would save face for everybody,” the official said of the proposed Commission action. “Even if it would be a bit humiliating for France, they probably know they cannot get away without anything.
“And it would also save face for Germany and the others, who are concerned about the longer-term effects, about not watering down the rules, but who also want to give France and its unpopular President a fighting chance,” the official said.
Socialist President Francois Hollande’s approval rating is at an all-time low of 13 per cent in some opinion polls due to public anger about unemployment, economic stagnation, public spending curbs and resistance to structural reforms.
Germany, one of the strongest advocates of budget discipline in the eurozone, has been reticent in criticising France since the announcement that Paris would not honour its commitments.
“It’s about the big political picture in France, in the end. That’s why Germany is so reticent. In Berlin they already have a strong picture where Marine Le Pen is the next French president,” the eurozone official said.