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11/12/2016

Schulz and Juncker at loggerheads over France

Euro & Finance

Schulz and Juncker at loggerheads over France

Competitors for the European Commission presidency.

Jean-Claude Juncker describes Martin Schulz’s lax attitude to France’s public debt as a “serious political error”. EurActiv France reports.

The tone was turned up a notch between the two candidates for European Commission presidency this weekend. When asked how to deal with France’s public debt, Martin Schulz stated on the French news channel BFM (4 April) that he was ready to negotiate if necessary.

This startled Jean-Claude Juncker on Saturday (5 April). During a meeting in Berlin, the former prime minister of Luxembourg and candidate for the European People’s Party (EPP) said that this was out of the question.

“Serious political error”

“It is a serious political error that Martin Schulz wants, for the third consecutive year in a row, to allow France to exceed the 3% deficit limit. This goes against the Stability and Growth Pact – which I wrote as President of the Eurogroup” declared Juncker.

France was granted a delay until 2015 to lower its public deficit to 3% of GDP. However, in 2013, France failed to meet its initial targets. Worse still, total French public debt reached a new historical record of €2000 billion, 100% of GDP, when according to the treaties, public debt of Eurozone states should not exceed 60% of economic activity.

The new French budget minister, Michel Sapin, stated that France wants to negotiate with Brussels on the “rhythm” of public debt reduction.

A delay in Europe’s interest

“France is not on its knees asking, deploring […] it is in the common interest for Europe to find a good rhythm, the rhythm necessary to adapt to the situation” said Michel Sapin on French radio (3 April).

France’s economy ministers travelled to Germany on 7 April to meet their German counterparts, and present the new measures of the “Stability Pact” announced by François Hollande in January.

No to Eurobonds

The candidates of the EPP established their economic policy by taking a stance against Eurobonds. They would allow member states to pool debt across the EU, and therefore alleviate the public debt burden.

>> Read: Public debt plan gaining momentum

“European obligations will definitely not be established in the next five years. They will only be considered when budget and economic policies converge and the EU can control national fiscal policies” claimed Jean-Claude Juncker.

 

Background

France is one of the countries of which the public debt exceeds economic convergence criteria set out by the Treaty of Maastricht, both in terms of annual deficit and total volume of debt. According to the treaty, public deficit should not exceed 3% of GDP, and public debt should be limited to 60% of GDP.

Macroeconomic and public finance predictions for 2014-2017 should be provided to the parliament within the stability programme in mid-April and to the Commission before 30 April.

Timeline

15 April 2014: Transmission of the macroeconomic forecasts for France 2014-2017