French Communists defy Hollande on budget cuts

PARIS Wed Oct 31, 2012 5:57pm GMT

France's President Francois Hollande speaks at a news conference at the end of the first session of a two-day European Union (EU) leaders summit in Brussels October 19, 2012. REUTERS/Christian Hartmann

France's President Francois Hollande speaks at a news conference at the end of the first session of a two-day European Union (EU) leaders summit in Brussels October 19, 2012.

Credit: Reuters/Christian Hartmann

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PARIS (Reuters) - The finance committee of France's Senate upper house rejected the law setting out government plans to hit a budget break-even by 2017 on Wednesday as its Communist members voted against it in protest at fiscal rigour across Europe.

Even if the law is rejected by the full Senate, it can still be passed by France's lower house of parliament. But it showed the resistance among left-wing allies of Socialist President Francois Hollande to efforts to set public finances straight.

It also sets the stage for a possible rejection of the 2013 budget bill itself in the Senate, which is due to review the package of 30 billion euros of savings from November 7.

"This is consistent with our policy of opposing austerity," Olivier Dartignolles, spokesman for the French Communist Party (PCF) said of the rejection.

"We are very worried by the turn of events. The direction being taken is failing across Europe - we are heading for a disaster scenario."

Communist members of the finance committee joined conservative opposition senators to vote the law down. That came only hours after Communist senators helped conservatives vote down a separate measure on gas and power price legislation.

"We will have exactly the same problem with the (2013) budget bill," Alain Vidalies, minister in charge of parliamentary relations, acknowledged.

Hollande wants to cut the public deficit from an estimated 4.5 percent of output this year to three percent in 2013 and a deficit of just 0.3 percent by the end of his mandate in 2017.

The National Assembly lower house, where Hollande's Socialists have an outright majority, can ultimately pass legislation rejected by the Senate after attempts are made to overcome differences between the two houses.

But rejection in the Senate, which is due to begin reviewing the budget bill November 7, would prove highly embarrassing for the government at a moment when it is already under fire from rivals and media for a string of policy and communication gaffes.

(Reporting by Emile Picy and Emmanuel Jarry; writing by Leigh Thomas)

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