Hollande calls for special summit on eurozone growth

BRUSSELS - French president Francois Hollande i has called for a summit on eurozone growth, warning that “Europe is threatened by a long and possibly interminable stagnation if we do nothing.”

In a speech to his ambassadors in Paris on Thursday (August 28), Hollande said the summit is needed to co-ordinate efforts across EU capitals to stimulate growth.

"The recovery is too weak. Inflation is too low. The [value of the] euro is too high," he said.

He also repeated his demand for the EU’s budgetary rules, which require governments to keep within a 3 percent deficit limit, to be applied more flexibly, nothing that "the rhythm of deficit reduction must be compatible with growth goals and weak inflation."

In response, a spokesman for the European Commission said the issues would be discussed at an informal meeting of finance ministers in Milan in early September.

Hollande’s request for flexibility is not new and he is not alone in making it. At the weekend, Italy’s transport minister said he would ask Brussels to exclude infrastructure projects from deficit calculations.

Paris has conceded that it will miss its 3.9 percent deficit target this year and is unlikely to bring its deficit within the EU’s 3 percent limit by the end of 2015.

But Hollande insisted that France needed to reduce its budget deficit, saying that it is a “condition for putting Europe back on a growth path capable of reducing unemployment”.

Hollande’s government is under pressure from Brussels and Berlin to step up its economic liberalisation programme.

On Wednesday, commission spokesman Simon O’Connor warned that "It is urgent for France ... to speed up the work they are doing, the structural reforms".

“There is no time to lose”, he added.

The French economy, which is the bloc’s second largest behind Germany, has flat-lined in the first six months of 2014. But its dismal performance has barely been bettered by the rest of the eurozone, which recorded meagre growth of 0.2 percent, leading to concerns that it could fall into a triple dip recession.

The Frankfurt-based European Central Bank is poised to launch a concerted bond-buying programme in a bid to stimulate more economic activity, as well as a new four-year programme of cheap loans for banks if they promise to increase lending to businesses.

Hollande’s PM Manuel Valls overhauled his government on Tuesday after economy minister Arnaud Montebourg launched an attack on the government’s economic policies as well as what he described as Germany’s “obsession” with austerity.

But Montebourg’s replacement, Emanuel Macron, formerly Hollande’s economic advisor, has faced immediate criticism from French trade unions after suggesting that country’s 35-hour working week should be reformed to allow exemptions from the limit.

"We could authorise companies and sectors, provided there is a majority [union] agreement on this, to have exceptions to the rules on working time and remuneration," Macron said in an interview with weekly Le Point magazine.