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EURO

Le Pen’s plan to ditch the euro ‘would cost France €30 billion a year’

Marine Le Pen's pledge to ditch the euro if elected French president would cost the country over €30 billion a year in increased borrowing costs, the country's central bank governor warned Monday.

Le Pen's plan to ditch the euro 'would cost France €30 billion a year'
Photo: Gena96/Depositphotos" target="_blank">Depositphotos
With less than three months to go before the first round of the election Le Pen is polling strongly on a nationalist platform of heavily curtailing migration, relinquishing the euro and organising a referendum on France's EU membership.
  
Banque de France governor Francois Villeroy de Galhau said that pulling out of the single currency would drive up the cost of France's borrowing.
   
“If we were alone, we would be helpless faced with financial market speculation… and helpless faced with US pressure on the dollar,” he told France Inter radio.
   
“Financing France's public debt would cost over €30 billion ($31 billion) a year: that's the equivalent of France's annual defence budget,” he said.
   
Villeroy de Galhau did not give a breakdown of the calculation but said the interest on France's debt had fallen by 1.5 percent since it adopted the single currency.
   
“That is very significant for those with home loans, for business investments and all taxpayers,” he said.
   
He also credited the euro with keeping inflation down, causing it to fall from nearly five percent annually before the 1992 Maastricht Treaty that ushered in the euro to under two percent currently.
   
Le Pen has argued that France needs to take back control over its monetary policy to boost growth — forecast to come in at 1.3 percent in 2017, below a eurozone average of 1.7 percent — and rein in unemployment.
  
Villeroy de Galhau acknowledged that the French economy needed to be “repaired and refurbished” but rejected the notion that the euro was the cause of its malaise.
   
“Many countries that share the euro with us are doing well on the economic front,” he said, warning against “tearing down the foundations, our currency the euro, which forms a very strong basis in uncertain times.”

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EUROPEAN UNION

How Britain tried to turn former French president Chirac against the euro

British diplomats tried to establish a "very private link" with former French president Jacques Chirac with the "unavowed aim" of exposing him to the risks of a European currency union, declassified documents revealed Thursday.

How Britain tried to turn former French president Chirac against the euro
French President Jacques Chirac (L) welcomes British Prime Minister John Major at the Elysee Palace 29 July 1995 in Paris. Photo: AFP
The government files from 1995 document Britain's plan to influence the French president's decision on whether to proceed with the Economic and Monetary Union (EMU), the group of policies that led to the formation of the euro.
   
“Chirac is alive to the risks of ploughing ahead with the EMU without thinking through the implications,” then British ambassador in Paris Christopher Mallaby wrote to the prime minister at the time, John Major, in a cable outlining his plan to “move the debate in our direction”.
   
He suggested “establishing a very private link” between Downing Street and Chirac's Elysee palace. 
   
“The pretext could be private discussions” about currency union, he wrote.
 
Photo: AFP
 
“The unavowed aim would be to ensure that Chirac was exposed to the risks of an early move to EMU, including the divisive political effect within the EU,” he added.
   
Britain never joined the currency union, having infamously been forced to withdraw the pound from a precursor on “Black Wednesday” in 1992 when it could 
not keep sterling above an agreed level, and was keen to stall the move towards a full union.
   
Mallaby targeted Chirac as a potential ally, saying his “thinking is unformed and influenceable.”
   
The documents also revealed Chirac's scepticism about European integration.
   
“He said bluntly that Europe was no longer very popular,” a foreign office cable quoted him as saying at a 1995 heads of government meeting.
   
The president added that the “EU seemed to be cut off from the real problems affecting the ordinary citizen… and people saw it as a mammoth bureaucracy poking its nose in where it was not needed,” added the memo.
   
Prime Minister Major replied that “he had been waiting five years to hear someone else say things like this!”, according to the cables.
   
Major is now a fierce opponent of Brexit, having been fatally damaged in office by internal divisions over his decision to sign Britain up to the Maastricht Treaty in 1992.
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