EU budget rules: Special treatment for France?

Giving France two more years to get its budget deficit reduced was a rational decision, said Virginie Rozière, member of the European Parliament (MEP) in the weekly Euranet Plus “U Talking to Me?” debate. According to the left politician from France, strict budget rules are not a good remedy for the economic crisis. She faced off with German MEP Michael Theurer, who is fighting for stricter rules and wants to strengthen the real economy at the same time.

It is time to reconsider, explained Rozière. According to the member of the French Radical Left Party, part of the Socialists & Democrats in the European Parliament, the economic crisis proves the rules to be wrong. “Applying rules stubbornly is not the right way to have a real economic policy in the eurozone,” she said during the debate.

“Rules should apply to everybody,” countered our second guest, German MEP Michael Theurer. He wished that the European Commission would have taken a clearer position towards France instead of giving the country two more years to get its budget deficit under the fixed 3 percent limit.

Theurer pointed out that countries like Ireland, Portugal and the Baltic states have all implemented harsh reforms and complied with the rules. He explained that unemployment cannot be overcome by higher debt, instead the real economy should be strengthened: “Countries should be competitive in a global surrounding.”

Giving France more time to reduce its budget deficit was a rational decision, said MEP Virginie Rozière in our “U Talking to Me?” debate. But MEP Michael Theurer said rules should apply to everyone.

‘Austerity does not work’

Sven posted on our Facebook page: “How to explain that the Commission plays softly towards France?” Artjoms Konohovs, from the Euranet Plus partner Latvijas Radio, joined the debate and asked the guests the same question. Rozière gave her opinion.

“I think, why Juncker is considering flexibility is simply because austerity does not work,” she said. “And now we have paid all around Europe, other countries have paid a harder price even. And we can see it doesn’t work, so it’s time to move on and try a real economic policy and not only applying rules without thinking of the consequences.”

‘Reform plans succeeded in a lot of countries’

But Theurer drew other conclusions – he considers austerity policy measures to be successful.

“The reforms plans really worked out. If we look to Ireland, for instance, that is the country with the highest growth rate in the whole European Union. Also in Portugal, also in Spain, I mentioned Latvia,” he said. “The population there took a lot of sacrifices with fiscal discipline and consolidation of budgets. If we tell them you have to do that and now we see they are on the growth path again, and others get an exception. I cannot agree with that.”

Rozière looked at the situation of these countries from another perspective.

“Can you say that the economic situation is good when half of the population is unemployed? Like in Greece, like in Spain, or in Portugal unemployment is very high now as well,” Rozière said. “Of course it is getting better, but it has been so bad that it can only get better. The question is not retaliate and to say, we suffered so we want you to suffer as well.”

But Theurer rejected the idea that austerity is the reason for unemployment. According to him, the question is how to get all the EU economies to be competitive. And countries that are competitive in a global setting have a better chance to fight unemployment than those relying on state interventions, he said.

“I don’t want to be accused for the unemployment in these countries, because I think that public debt is one reason for that unemployment. I don’t believe in a globalised world that you can protect the European Union from globalisation and that you can, by publicly funded programs, overcome the recession or the unemployment,” Theurer said.

Europe has a responsibility here, said Rozière. She wants to consider public investment to relaunch growth.

Stavros Samouilidis from the Greek Euranet Plus partner Skai Media pointed out that Greece was closely following the debate around the delay the Commission has accorded to France. He wanted to know from Rozière whether this new development would “in any way” change the French government’s “so far passive stance” towards Greece’s debt issue?

The French Socialists did support Greek demands, but governments have been harsh on Greece, Rozière explained, adding that “this is a complicated issue.”

Listen to the whole debate below (or watch it above)

• Author: Danièle Weber, Euranet Plus News Agency

Suggested Euranet Plus stories

• France gets two-year delay to meet EU deficit target | February 25, 2015 | Euranet Plus News Agency | English
  France will not be sanctioned for its imbalanced budget. The European Commission proposes to accord two more years to the country to correct its excessive deficit and reach the fixed limit of 3 % deficit of the GDP in its budget. According to the Commission the decision was “difficult”. It is said to be a “political” choice and is criticized by those who plead for a strict application of the rules of the stability pact. France did not get a gift, French Commissioner Pierre Moscovici stated after the announcement.

• Who wins with more flexible economic rules in Europe? | January 20, 2015 | Euranet Plus News Agency – U Talking to Me? video edition | English
  Last week the European Commission had announced its intentions to be more flexible on the Stability and Growth pact, but insisted that the rules would not be modified. Nevertheless, there will be a change of interpretation that could prevent needed reforms from being implemented, said Markus Ferber, a German member of the European Parliament (MEP), who discussed the Commission’s economic programme with Euranet Plus correspondents in this week’s “U Talking to Me?” debate. Ferber predicts that investors will be deterred by the new guidelines.

• Brussels announces smarter application of Stability Pact | January 13, 2015 | Euranet Plus News Agency | English
  On Tuesday (January 13) Brussels communicated legal details on how to implement its 315 billion euro investment plan and how to select projects to be financed. But the key aspect is what appears to be a main turn in the way Brussels is tackling the crisis. The Commission officially admitted more leniency for the EU member countries to reduce their fiscal deficits.