Montebourg urges alternative to German austerity
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.
With an annual deficit of 4.1% of GDP in 2013, France has exceeded the 3% budgetary limits enshrined in the EU treaties.
The European Commission launched measures to deal with excessive deficit and gave France an extra two years to reduce its public deficit to 3%.
In exchange, France was expected to table structural reform plans to reduce their deficits in the long term.
France, whose economy barely grew over the last two years, is an example of the difficulty facing many governments, implementing unpopular structural reforms of pensions or labour laws and keeping a tight rein on public spending.
The Commission believes t it will be necessary to reform the labour market and pensions in order to "unlock the growth that France so badly needs.”
It also expects France to open up its electricity and rail markets, which are currently dominated by former state monopolies EDF and SNCF, the energy and rail companies.