Montebourg urges alternative to German austerity

Arnaud Montebourg [Parti Socialist/Flickr]

The time has come for France to resist Germany's "obsession" with austerity and promote alternative policies across the eurozone that support household consumption, firebrand French Economy Minister Arnaud Montebourg said on Sunday.

Deficit-reduction measures carried out since the 2008 financial crisis have crippled Europe's economies and governments need to change course swiftly or they will lose their voters to populist and extremist parties, Montebourg told a socialists' meeting in eastern France.

"France is the eurozone's second-biggest economy, the world's fifth-greatest power, and it does not intend to align itself, ladies and gentlemen, with the excessive obsessions of Germany's conservatives," Montebourg said.

"That is why the time has come for France and its government, in the name of the European Union's survival, to put up a just and sane resistance [to these policies]."

Montebourg said consensus was growing among economists and politicians worldwide on the need for growth-oriented policies and mentioned his German socialist counterpart Sigmar Gabriel and Italy's premier Matteo Renzi as potential allies.

He cited former president Charles de Gaulle and former British prime minister Margaret Thatcher as having effectively spoken up to change the course of EU policies they opposed.

Montebourg said he had personally asked President Francois Hollande for "a major re-direction of our economic policy". The government should now focus less on cutting debt than on supporting households to revive consumption, a traditional economic driver, he said.

Montebourg, who makes no secret of his own presidential ambitions, is known for his frequent attacks on austerity, but his latest comments are likely to embarrass Hollande, who despite mounting pressure said just days earlier he would not back away from his policy based on spending cuts and corporate tax breaks.

Hollande's business-minded policies have alienated many left-wing lawmakers and voters already frustrated with his failed pledge to curb unemployment. He is now the most unpopular president in over half a century, with an approval score of 17 percent in the latest Ifop poll.

Hollande's office declined to comment on what Montebourg said. A source close to Prime Minister Manuel Valls said Montebourg had gone too far.

"Firstly, there are declarations on economic policy and secondly, statements on our European partner Germany that are extremely harsh. Therefore, considering the line has been crossed, the prime minister has decided to act," the source said, giving no further details.

In an interview published on Saturday, Montebourg had already warned the austerity measures pursued by France and its European peers were strangling growth.

Six years after the collapse of banking group Lehman Brothers and the start of the global economic crisis, the United States and Britain have returned to growth while eurozone economies are still shrinking or stagnating, he noted on Sunday.

"There is a disease specific to the eurozone, a serious disease, persistent and dangerous," Montebourg said, arguing that fiscal and monetary austerity would not help end the crisis but had only worsened and extended it.

"The time has come for us to take on an alternative leadership, to set up an alternative motor and promote ideas and practices alternative to this destructive ideology," he said.

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Eurochild's picture

One wonders, doesn't Montebourg - the 2017 presidential hopeful - believe France should reform anything? Doesn't he see that there are huge internal problems that create France's stagnation? France's public spending (and taxation) is already one of the highest in the world, among the highest in Europe. Its debt is pretty high too. Does he think the only solution to France's problems is borrowing more?

Mike Parr's picture

"Montebourg said he had personally asked President Francois Hollande for "a major re-direction of our economic policy". The government should now focus less on cutting debt than on supporting households to revive consumption, a traditional economic driver, he said"

There is much to agree with what he said - where I part company is in the above with respect to household consumption. What France (and other MS outside of Germany) need are jobs that pay a fair wage. There is a solution that in the medium-longer term is fiscally positive. Let me explain (in the unlikely event that some french politicos read this - my consultancy rates are very reasonable :-) )

The French housing stock has, overall a very poor thermal performance - or as EdF noted, electricity demand is highly sensitive to temperature. Improving the energy performance of the FABRIC of the housing stock will do a number of things:
a) it is labour intensive but not capital intensive - i.e. it needs lots of people
b) jobs created would be measures in the 100,000s
c) the best type of entities to deliver the insulation programme would be the SMEs - not large corps
d) these jobs would last for +15 years (there are millions of houses)
e) this would allow you to export energy to perfidious Albion

the difficult bit is capitalising the energy savings and matching up-front costs (= paying people and some material) with the savings. Tricky if you are a small company, note so difficult if you are a state.

When the recent energy efficiency target was announced, the EIB also announced an energy efficiency programme in Romania - costs work out at somewhere around 1eucrocent/kWhr saved - trust me - you cannot generate nuclear elec at that.

There we are - a free idea - over to you Messer's. Montebourg, etc.

ironworker's picture

Europe needs 27 more Montebourg's. Regardless the end of story, at least someone have the guts to say the truth.

Fos_Tonkin's picture

The French word which, in my opinion, would best describe Montebourg and everything that he's doing or saying would be "non-sense". But what has always seemed as real non-sense to me is not Montebourg himself, but all those French dodos who just like him so much. How's that even possible?

johngflynn657's picture

Germany, Finland, Austria and the Netherlands should keep the Euro and just move on. The UK does not want to be in. France and Italy are not aligned with the other four philosophically. Spain and the others can join the Four if they like but it is not crucial if they don’t. The none Germanic (Romance language) states are of a different mindset. They have been for hundreds of years. The EU won’t stand long term because of the cultural divisions. see more here