EU tells France its must respect euro deficit rules

[RonOnGuitar]

France demands that other countries follow the laws of the EU-Euro mess - laws that France refuses to follow.



Alrighty, then!



EU tells France its must respect euro deficit rules

=====



European Trade Commissioner Pascal Lamy strongly criticised French budget policy on Friday and went on to tell Prime Minister Jean-Pierre Raffarin to his face that France had to play by euro-zone rules.



Lamy, speaking on French radio, attacked as "facile" remarks by Raffarin late on Thursday defending the deficits and warned that the EU would insist on rules being respected.



The commissioner, himself French, then had a meeting with the prime minister, saying afterwards he had insisted that France had to respect its obligations.



The exchanges have come to a head because France has pushed ahead with tax cuts, deciding to cut income tax further by three percent, even though it is running excessive deficits, far above the ceiling of three percent of output, and seems set to do so until 2006.



However, Raffarin, asked a short time later when he arrived for a festival in southeastern France if he feared a crisis with the EU Commission over his economic policies, replied succinctly "no".



The second French commisioner, Michel Barnier, responsible for regional policy, who was also attending the festival, noted that France had stressed it stood by its European commitments.



Meanwhile in Brussels the spokesman for Economic Affairs Commissioner Pedro Solbes insisted that although the commission would show maximum flexibility, nothing had changed and euro-zone countries had to respect the rules.



Lamy had been unusually blunt in his remarks on RTL radio in signalling that the commission would take a hard line with France over its breaches of euro-zone budget rules.



He insisted: "We will remind France of its obligations, in a friendly, firm way, saluting like police do when they have to make citizens respect the law.



"And then, if necessary, we will decide whether or not we have to pull out the book of traffic tickets."



Lamy said: "There can be no cheating with the common rules which have been agreed. We (the commission) have already shown quite a lot of flexibility in the interpretation of these common rules."



Lamy explicitly criticised the line taken by Raffarin who had said on French television late Thursday that French jobs came first, that he did not have to do complicated mathematics "for any office in any country" and that there was no question of France being fined by the EU for running excessive public deficits.



Lamy commented that "I find this rather facile" and rejected the impression that the commission was without sympathy, having only the view of an accountant concerned with applying in fine detail all kinds of rigid rules.



And he objected that Raffarin's remarks could be interpreted as implying that the commission did not care about growth and employment in France.



"This is a presentation which does not correspond to reality," Lamy said.



He rejected the argument that deficits were good for growth, saying: "Not if they are permanent and big. And in France the deficit is permanent and big and that is not good for growth."



He then said the French position posed the question "whether one can trample on common rules, particularly if, as is the case for France, one is concerned about one's standing."



He said France could not have both the advantages of the euro such as "low interest rates ... and at the same time not respect common rules".



These strong comments come two days after the governor of the Bank of France, Jean-Claude Trichet, who is set to head the European Central Bank, warned that any softening of EU deficit rules would erode euro-zone credibility.



Trichet said that current rules "offer budget policy sufficent room to maneuver to cope with economic difficulties" and that it would be a mistake to believe that raising the French public deficit would necessarily promote economic growth.