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France needs austerity, Juncker tells mayors

Euro & Finance

France needs austerity, Juncker tells mayors

Jean-Claude Juncker told French mayors he supported France's labour market reforms.

[European Union]

Jean-Claude Juncker spoke to French mayors on Tuesday (31 May) to insist on the need for structural reforms and a rebalancing of the country’s public finances. EurActiv France reports.

The European Commission President set a new precedent yesterday (31 May) by appearing at the congress of the Association of Mayors of France (AMF) in Paris. He accepted that Europe was not attentive enough to the needs of local authorities, but went on to stress to the assembled mayors the need for austerity.

“The recovery of the public finances is a necessity,” Juncker said. He added that he was not a preacher of austerity, citing the €315 billion investment plan he initiated at the start of his mandate.

EU's larger economies are Juncker Plan's biggest winners

In its first year, the Juncker Plan was mainly utilised by the EU’s big economies, notably France, Italy and Spain. EurActiv France reports.

But for France’s local authorities, whose budgets are being slashed by the state in an attempt to reduce the deficit, this was not necessarily easy to hear.

Anne Hidalgo, the Socialist mayor of Paris, believes these cuts are no longer sustainable. She told the French newspaper Les Echos on Tuesday, “We have to reignite the motors of public investment. Not for just anything, not for the departmental or regional administrations, but for strategic projects concerning housing, the energy and ecological transitions, transport etc.”

Between austerity and underinvestment

After a cut of €1.5 billion in 2014, the state is set to slash its contributions to local authorities’ budgets by €11 billion between 2015 and 2017. Mayors from all over France, and of all political colours, have called on the government to cancel the cuts planned for next year.

But the president has held firm on his decision. In an interview published by the newspaper Sud-Ouest on Tuesday, François Hollande said he would “speak the truth” with France’s local leaders.

“I have already worked to unblock €1 billion this year to support community and inter-community investments,” Hollande said. He added that he was “mindful of the situation” but that he had to fulfil his European commitments.

Juncker expressed his exasperation at the fact that Paris appeared, once again, to be blaming Brussels for its own decisions. “The budget pact was adopted by all 28 countries, including France. The French government has made commitments to Brussels on this matter,” the Commission President said.

He went on to reaffirm the need for structural reforms and expressed his support for France’s controversial new labour law.

Commission backs French labour law reforms

Vladis Dombrovskis, the European Commissioner for the Euro and Social Dialogue, has welcomed France’s controversial labour law reforms, which directly respond to the EU executive’s criticisms of the French economy. EurActiv France reports.

“Labour law is a necessary protective cordon. The bill currently being discussed in France is the least that should be done,” Juncker said. But he refused to go into greater detail or to discuss the consequences of the reforms.

“It is not the European Commission’s place. This is a French affair, it is up to the government and the local authorities,” he said.

“Erotic relations” with public services

On the question of trade relations with the United States, a subject of real concern for many mayors, the Commission President tried to offer reassurance. In a recent conversation with US President Barak Obama, “I said we did not intend to give up our values or our public services,” Juncker said.

He added that relations with public services in other European countries were “at least as erotic” as in France, in reference to Belgium, where transport strikes are causing just as much disruption as the current industrial action in France.