EU sets March deadline for France to fix budget

The EU has given France a stay of execution after deciding to give it until March to fix its budget. Paris could still face fines however if it fails to implement further economic reforms.

EU sets March deadline for France to fix budget
France has until March to implement further austerity measures, demanded by the EU.

The European Commission on Friday gave France, Italy and Belgium until March to fix their budgets or risk humiliating penalties for breaking tough eurozone spending rules.

"We will decide in early March whether any further steps are necessary" said Economic Affairs Commissioner Pierre Moscovici, referring to new EU powers over euro government budgets.

"By then we will have a clearer picture of whether governments are delivering on their reform commitments,” said Moscovici.

“It is in the interests of the euro area that they do so. Everyone must play their part to strengthen economic recovery.”

Worryingly for Paris the European Commission made clear on Friday when it delivered official opinions on euro government budget plans for 2015 under those new powers, that France is the most at risk of sanctions.

The French government had not “taken effective action”, according to the Commission’s report to meet the strict EU budgetary rules, referring to the fact that Paris is set for a deficit of 4.3 percent of GDP in 2015, way above the EU.

“The Commission is of the opinion that France has made limited progress with regard to the structural part of the fiscal recommendations issued by the council [of EU finance ministers] in 2014,” said the report.

“Overall the information available so far indicates that France has not taken effective action for 2014 at this stage.”

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Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

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