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FINANCE

Hollande welcomes EU Budget ‘compromise’

France's President François Hollande on Friday said an EU deal on the bloc's multi-year budget was "a good compromise," but reaction in France has cast doubt over the extent of French gains.

Hollande welcomes EU Budget 'compromise'
Photo: Bertrand Langlois/AFP

"It was an agreement that as usual was long to produce, but which I believe is a good compromise," Hollande said at the close of a marathon 25 hours of tough talks over the €908 billion budget (a cut of 3%) for 2014-2020.

Speaking at a press conference from Brussels on Friday evening, the French president side-stepped suggestions that the Franco-German alliance had been compromised by German Chancellor Angela Merkel's alliance with a 'victorious' British prime minister David Cameron in the budget negotiations.

"That's an old debate. Let's talk figures," said Hollande.

"The British wanted €885 billion in payment credits. We wanted €930 billion. We ended at €908 billion, so in fact, the British compromised by €23 billion."

Amid French gains, 'worries for the future.'

Analysis has been swift on both sides of the Channel, with Britain's Eurosceptic Daily Telegraph saying the negotiations had left François Hollande looking "weakened and isolated."

French centre-right daily Le Figaro said the division between Germany and Britain on one side, and France on the other, was "worrying for the future" as it "confirmed the paralysis of the Franco-German axis."
 
It pointed out that the €908 billion payment ceiling was much closer to the final British demand of €905 billion than to Hollande's final demand for a "payment floor" of €913 billion.
 
The resulting deal, in which Britain's prized €4-billion budget rebate remained virtually intact, was a "double success" for David Cameron, showing Eurosceptics that he could set limits to the EU's ambitions and showing Europhiles that the UK could make a difference to EU decisions, the paper said.
 
There were some gains made by the French president, however, particularly concerning the Common Agricultural Policy, where cuts were less heavy than had been expected. At his Brussels press conference on Friday, Hollande claimed that he had made agriculture one of his "main priorities" and had reached his goals in that respect.
 
French daily Le Parisien labelled it a “victory” that, under the historic new deal, the agricultural budget would be reduced from 41.5 billion in 2014 to 37.6 billion euros in 2020. It also said that France received "special treatment" thanks to a special fund dedicated to its rural development.
 
The budget cut came just days after the French president had warned against too much austerity at the expense of growth in his speech to the EU parliament.

In his speech to the European Parliament earlier in the week, Hollande had warned deputies about the dangers of cutting spending.

“Yes, make cuts but weaken the economy, no," Hollande said just days before EU leaders discussed the budget.

Earlier on Friday, European Council president Herman Van Rompuy broke the news of a finalized budget with a tweet.

'France no longer has influence over Europe.'

French popular opinion appeared to be divided in the immediate aftermath of the budget deal. One reader of Le Figaro represented a degree of resentment  towards Britain's influence over the negotiations.

"The worst thing is that the British are not really a part of Europe, but profit from all the positive aspects and give lectures."

However, there was an opposing strand of thought which laid the blame on President Hollande, who leads a Socialist government.

One reader commented:  “Reason – embodied by Cameron – was the real winner at this summit … it’s a shame France is so badly represented. France no longer has influence over Europe because it is too weakened by socialism.”

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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