EU pressure on France as it hits recession again | News | DW | 15.05.2013
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EU pressure on France as it hits recession again

The EU has called on France to present a credible program of structural economic reforms if the EU is to grant it two more years to bring its budget deficit down. France is back in recession.

A picture taken from the roof of Paris' city hall on October 26, 2010 shows bridges along the Seine river in front of the Eiffel Tower in Paris. AFP PHOTO PATRICK KOVARIK (Photo credit should read PATRICK KOVARIK/AFP/Getty Images)

Paris - Eifelturm und die Seine

In a joint briefing European Commission President Jose Manuel Barroso and French President Francois Hollande tackled issues of growth, jobs and austerity policies. Hollande called for a growth pact to be activated. He said growth and youth employment should be the priorities. Barroso said the EU had a "competitiveness problem."

Speaking to French radio earlier on Wednesday, Barroso said it was unfortunate that France "sometimes has a very negative view of the opportunities of the modern world, for example of globalization." He said that France needed to prove its commitment to pursue further structural reforms. "The truth is that France has lost competitiveness over the past 20 years."

Hollande became the first French president since 1997 to appear before all 27 European commissioners on Wednesday. His audience came exactly a year after his inauguration as president in Paris. He is already struggling to tackle a 16-year high in unemployment and record-low approval ratings at home.

Barroso said that it was not a question of Hollande appearing to account for himself: "He is not coming to pass a test" the Commissioner commented, after he had met Hollande earlier in the day.

The Commission had already said it will grant France a two-year delay to 2015 for the country to reach the EU target of bringing its deficit to three percent of Gross Domestic Product (GDP). France has produced reports on the state of the ecomony which Barroso said: "We are in process of analyzing."  Recommendations are to be made for each member country on May 29.

Eurostat, the EU's statistics office, said Wednesday that nine of the 17 eurozone countries are in recession, with France a notable addition to the list. Overall, the euro region's economy contracted 0.2 percent in the January-March period from the previous three months.

"The economic situation is serious," Hollande admitted but said that "the breakdown of growth concerns the whole of Europe." 

Before he left for Brussels, Hollande said: "The recession is European and the solution is European," adding that he intended to "push for a reorientation in Europe towards growth."

French government spokeswoman Najat Vallaud-Belkacem said Hollande told ministers at a cabinet meeting on Wednesday that the situation was "serious" but noted that the recession was "not as deep as the one in 2008-2009."

French Finance Minister Pierre Moscovici blamed the recession on regional factors: "We are in Europe, the eurozone countries are our main clients and our main suppliers, and when the environment around us is depressed, well, that's the main factor in the slowing of the French economy."

Moscovici has come under pressure in recent days amid talks of a French cabinet reshuffle. He maintained the government's forecast of GDP growth of 0.1 percent over the whole of 2013 and said the EU needed to rebalance its policies towards stimulating growth rather than austerity.

"All of this must push us to have a European policy which goes for growth," he told reporters after a cabinet meeting just before Hollande left for Brussels.

jm/ jlw (Reuters, AFP, AP)

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