Stalemate threatens to delay progress in shrinking deficits, which remain well in excess of EU rules
Paris and Brussels look set to clash over efforts to bring French spending back into line with EU rules, as political turmoil in the region’s second-largest economy risks delaying progress on cutting its “excessive” budget deficits. Draft guidelines presented privately by EU officials to Paris at the end of June, and seen by the Financial Times, show Brussels wants France to impose spending cuts of €15.4bn, or 0.6 per cent of GDP, on average per year over the next seven years.
Referring to Brussels’ plans for spending cuts, an EU diplomat said: “Spain will probably do it, Italy will be difficult, for France it will be nearly impossible.” Andrew Kenningham, chief Europe economist at Capital Economics, said even without a change in government, getting France back on track to compliance “would have been difficult”. “Parliament is now stacked towards even less enthusiasm for deficit reduction,” he added.
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