New French finance minister says pace of deficit reduction should be renegotiated with EU

PARIS – France’s new finance minister sparked a dispute with Europe on his first day in office Thursday when he suggested Paris renegotiate the speed at which it cuts its budget deficit to limits set by the European Union.

Michel Sapin told radio station France Inter that France still aims to reduce its deficit to 3 per cent of GDP, but that the pace at which that is achieved should be discussed. France had previously promised to do so by 2015.

The idea drew rapid criticism from European Central Bank President Mario Draghi. “Undermining agreed rules undermines trust,” he told a press conference.

Sapin took over as finance minister from Pierre Moscovici on Thursday.

France missed its deficit target last year and has repeatedly pushed back the date by which it will bring its finances into line with European limits. Its deficit last year was 4.3 per cent.

The European Commission — the bloc’s executive arm policing compliance with the deficit rules — has left no doubt that it expects bold and swift action from France to meet its budgetary and reform targets.

“It is essential that France acts decisively, both to ensure the sustainability of its public finances . and to address well-known bottlenecks to competitiveness and growth and thus employment,” EU Economics Commissioner Olli Rehn said earlier this week.

Speaking later after a hand-over ceremony at the finance ministry, Sapin sought to recast the deficit debate as one not of France versus the EU, but one of France versus itself.

“It’s important for us to keep our deficit targets because they are pledges to ourselves, because it’s in the profound interest of France,” Sapin said. “If we want France to be respected and heard, a France that matters, it must put order in its finances, independently of any pledges.”


Associated Press writer Juergen Baetz in Brussels contributed to this article.