Time ticking for France on deficit

The clock is ticking for France after the European Commission gave Paris three months to present a set of structural reforms or face sanctions.

After giving France a further two years, until 2017, to bring its deficit under the three percent threshold, to 2.8 percent of the GDP, the European Commission on Friday said Paris must reduce French structural deficit by 0.5 % of GDP in 2015, 0.8 % in 2016 and 0.9% in 2017.

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  (Photo: Images of Money)

It gave France until 10 June "to take effective action and to report in detail the consolidation strategy that is envisaged to achieve the targets".

For 2015, these new targets mean that French government will have to find an extra €4 billion.

A commission official warned that Brussels "is waiting for a structural answer, not one-shot measures" and that proposals will have to be presented by the end of April.

For 2016 and 2017, the commission is "waiting for a comprehensive and credible National Reform Programme (NRP), with a detailed agenda and specific measures", said the official, referring to the programme member states have to present to reach the 2020 economic agenda targets.

EU economic affairs commissioner Pierre Moscovici spent the weekend in Paris repeating calls that action needs to be taken. He is due to meet President François Hollande later on Monday (2 March).

The recently-voted Macron bill, on de-regulation, is "a first step" in the right direction but "structural reforms must be started", Moscovici said, adding that a reform of the job market will be essential.

After the Macron vote, PM Manuel Valls announced that a reform of the labour market will be voted before summer. It will be a major test for his government, closely watched by the Commission.

The planned reform would change the level of trade union representation in companies, aiming to make hiring people easier. The latest statistics show that 5.89 million people were out of work in France.

The proposals are already being met with strong opposition from trade unions and some of the Socialist rebels who tried to derail the Macron bill.

A national strike is already called for 9 April, to protest against "austerity" and measures that "worsen workers’ conditions".

The government is also facing difficult local elections on 22 March.

The far-right National Front is leading (33%) in the latest poll published by Le Parisien daily, with the centre-right UMP on 27 percent and Hollande and Valls’ Socialist Party on 19 percent.

More pressure is coming from former President and UMP chief Nicolas Sarkozy i, who in an interview with Le Figaro newspaper on Monday called for "an alternative policy".

Sarkozy says there should be a large reduction in public spending and an easing of the 35-hour working week.

French Economy minister Emmanuel Macron is due in Brussels on Monday to try to convince the commission of his government’s will to implement long term and comprehensive reforms.

Meanwhile there are other considerations too, including not appearing too soft on France.

Some German politicians were irritated that Paris was given yet more time to bring its budget deficit down.

Gerda Hasselfeldt, the chairwoman in the Bundestag for the CSU, the influential Bavarian ally of Chancellor Merkel’s CDU, wrote to European Commission President Jean-Claude Juncker to urge him to enforce the rules.

"It is our responsibility for the EU and for the Eurozone not to tolerate exceptions,” she said, according to Die Welt am Sonntag.