France and Germany had a ‘meeting’ last Monday to discuss about the latter’s support on the problematic budget of France regarding the high deficit levels. This comes after the submission of France’s 2015 budget upon approval by the European Commission (E.C.).
The Hexagone claims that slow growth must be fought at all costs. However, Germany is opposed to such policies calling for austerity measures and investment plans. The question that raises here is whether or not the two biggest E.U. economies are going to cooperate to come up with a viable solution for everyone. The next card though will be played by the E.C. officials who will decide on the faith of France.
France needs further deficit extension
It is not news that the second biggest European economy is facing severe issues that call for immediate action. It seems that the problems for France got worse when they delivered the 2015 budget. France had to provide deficit figures of lower than 3% because of the two-year expansion, which was granted by the E.C. on 2013 to meet this criterion.
However, their deficit estimate for 2015 is 4.3%, way higher than the one that was imposed. They also mentioned that the deficit will drop under 3% in 2017. This is against the Stability and Growth Pact, the agreement that maintains stability in the E.U., which among others obliges governments to keep their deficits under 3%.
Meeting on deficit problems
It was three days ago when the French Finance minister Michel Sapin and the Economy Minister Emmanuel Macron went to Berlin to talk about Germany’s support on the deficit issue. France tried to persuade Germany to provide a €50 billion investment program to the E.U. economy in order to balance their cuts. This was not accepted of course by the German Finance Minister Wolfgang Schäuble but both countries agreed to prepare an economic paper that will propose solutions to help France overcome this problem.
Behind the scenes
France is claiming that they are determined to promote growth and bring back prosperity to the French people. They tend to do that by overlooking the E.C.’s rules about the deficit ceiling. However, the pressure from the E.C. officials and Germany is enormous. Will they give in to the E.C.’s regulations and Germany’s focus on austerity measures? Maybe that is the case.
According to the German news magazine Der Spiegel, France and Germany are composing a report that will include measures ensuring France’s deficit reduction on an effort to persuade the E.C. to approve the 2015 budget. Thus, the plan is focused on the French working class who is about to face severe austerity promptly.
E.C.’s decision for France budget approval
Everyone is waiting to see if the European Commission. is going to approve the French budget or send it back to Paris to be altered and impose sanctions. But a senior German government official said yesterday that the budget will not be discussed at the summit of EU leaders this week. This implies that a possible agreement is being made between France, Germany and the Commission, in order for the last to approve the 2015 budget.
If this come true, it is high likely that the situation in France will change dramatically and may cause political turbulences.