It seems that Mr Moscovici was expecting an even more ‘soft’ approach towards France from Mr Juncker but luckily this is not the case. From left to right, Pierre Mocovici, European Commission responsible for Economic and Financial Affairs and Jean-Claude Juncker, President of the European Commission.
Plenary session in Brussels – week 46 2014 – EP President Opening of the Plenary: 25th anniversary of the fall of the Berlin wall. Statement by the President.
(EP Audiovisual Services, 12/11/2014)
– The continuous deterioration of France’s export competitiveness is expected to weigh on the recovery.
– As regards public finances, the general government deficit in 2013 stood at 4.1% of GDP. However, the headline deficit is expected to increase to 4.4% of GDP in 2014.
In addition, Tthe Commission’s report also gives recommendations on how to make it through. Moreover, it segregates the suggested measures in 3 major categories: public finances, cost of labour, growth and competitiveness.
1. Recommendations on public finances:
– France has consistently recorded high general government deficits, which have led to a build-up in public debt.
– The Draft Budgetary Plan and the Draft Programming Law for Public Finances for 2014-2017 postpone the correction of the excessive deficit to 2017 and the achievement of the MTO is now only foreseen by 2019.
– Public expenditure, which represented 57 % of GDP in 2013, has proved difficult to reduce.
– Most recently, the ‘Modernisation de l’Action Publique’ (MAP) aims at identifying expenditure measures in a longer term perspective. However, the savings generated by this spending review remain limited so far.
– The reform of local administrations is necessary.
– Potential gains from the creation of metropolitan areas are sizeable, but will crucially hinge on the final design and implementation of the reform.
– A rationalisation of the administrative organisation of the local authorities could enhance the efficiency of local expenditure in the medium-term depending on the final design and implementation of the planned territorial reform.
– Some steps have been taken to reinforce the governance of public finances by local authorities.
– Little has been done since June 2014 to improve the long-term sustainability of public finances.
– France has a high and rising overall tax burden.
– The Draft Budgetary Plan for 2015 contains some small first steps towards simplification of the tax system but also creates new tax expenditures contrary to the Council recommendation to simplify and increase the efficiency of the tax system.
– There has been little progress in the area of environmental taxation.
2. Recommendations on labour cost:
-The government has also announced a liberalisation of bus lines and a reform of Sunday opening hours.
– The recent simplification of authorization procedures for the opening of trade outlets is a step in the right direction, but its impact will crucially depend on how it is implemented.
– France is among the Member States where the cost of labour is the highest.
– An ambitious package to reduce the cost of labour is being rolled out.
– The reforms implemented to reduce the cost of labour are expected to have a positive impact on competitiveness, although its magnitude is uncertain.
3. Recommendations on growth and competitiveness:
– Simulations carried out suggest that the benefits of this package in terms of employment creation could be substantial.
– However, the second evaluation report of the CICE shows a lower immediate take-up than initially envisaged.
– Moreover, the cost of labour at the minimum wage remains high.
– Despite a number of measures taken, policy action regarding the labour market remains incomplete. A reform of the conditions of the ‘accords de maintien de l’emploi’ to further reduce rigidity of open-ended contracts is not considered at this stage.
– Government plans to reform the Justice Prud’homale are welcome to reduce the cost and uncertainty related to long dismissal dispute procedures and, given the observed malfunctioning of the system, an ambitious approach is required.
– There remains an important cumulated deficit in the unemployment benefit system and the measures that have been adopted or planned so far do not close the gap.
– France has taken some limited additional steps to increase the employment rate of older workers but a more comprehensive approach is needed.
– France has experienced significant losses in its export market shares since 2000 and is not regaining competitiveness at a sufficient pace.
– A simplification programme has started aiming at reducing the administrative burden and procedures for firms, but its scope should be broadened with a view to reducing more decisively the burden stemming from taxation and labour regulations.
– Social partners are negotiating to improve the quality and effectiveness of the social dialogue, which encompasses the recommended review of firm-size related social thresholds.
– A report of the ‘Inspection Générale des Finances’ (IGF) informs the ongoing government plans as regards the reform of regulated professions and highlights the potential benefits of the reform.
– Based on the report of the IGF, the government is preparing a reform of regulated professions and other economic activities, though with a much more limited scope both in terms of professions and types of regulations covered.
– The reform of the rail network infrastructure management is a step in the right direction.
– Some further progress has been made to open up competition in the retail market for electricity and to increase interconnection capacity.
– Since June 2014 an evaluation of the ‘Crédit Impôt Recherche’ (CIR) has been carried out but no adaptation of the CIR is currently envisaged.
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