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France will cut deficit at appropriate pace: Sapin
October 20, 2014 / 6:28 AM / 3 years ago

France will cut deficit at appropriate pace: Sapin

PARIS (Reuters) - French Finance Minister Michel Sapin reaffirmed ahead of a meeting in Berlin with his German counterpart on Monday that France would cut its deficit at a rate appropriate to maintaining a fragile recovery.

French Finance Minister Michel Sapin speaks during the questions to the government session at the National Assembly in Paris, October 14, 2014. REUTERS/Charles Platiau

“We must not go all out for deficit reduction, we have to slow it down because we must be in harmony with the needs of the French economy - we must moreover support growth,” he told France Info radio.

Sapin reiterated a long-held French view that Germany should lead an effort to boost investment in the euro zone and promised that France would continue to pursue structural reforms.

“We are not going to do a deal along the lines of ‘you give me that, and I’ll give you this’ - it’s about what is right for each of us and what is right for Europe,” he said of the talks later with German Finance Minister Wolfgang Schaeuble.

France confirmed last month it would break a promise to bring its deficit below an EU-mandated ceiling of three percent of output next year. The European Commission is due to decide by the end of this month whether to reject its 2015 budget in what would be an embarrassment for the core EU member.

Economy Minister Emmanuel Macron, who will accompany Sapin on the trip, said at the weekend he was “totally sure” that the EU executive would ultimately not take that step and voiced hopes that Germany and France would see eye to eye on how to boost euro zone recovery.

France expects growth of just 0.4 percent this year, rising to 1.0 percent in 2015.

Separately, German daily Frankfurter Allgemeine Zeitung quoted Macron as calling on Germany to release 50 billion euros of investment as a counterparty to the 50 billion euros of savings on spending France has promised to make up to 2017.

“Fifty billion euros of savings by us, 50 billion euros ($63.67 billion) of extra investment by you - that would be a good balance,” he told the newspaper. “It is in our collective interest that Germany invests.”

Jean Pisani-Ferry, the economist charged by the French government with drafting a joint report with a German peer on reform and investment opportunities, suggested it was time for Berlin to “re-consider its priorities”.

“Germany is still living on the laurels of the (Gerhard) Schroeder period,” he said of the center-left ex-chancellor who radically overhauled Germany’s labor market in the 2000s.

“In Germany, apart from the minimum wage, there have been very few reforms of major import in the past few years,” he told Les Echos newspaper.

Reporting by Mark John; editing by Natalie Huet/Brian Love

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