Bundesbank’s President Weidmann criticises France and the EU. Credibility at risk?

Mr Sapin seems to be asking Mrs Georgieva here for a "discount" on France's contribution to the EU budget, given the severe economic problems in Hexagone. From left to right, Michel Sapin, French Minister for Finance, and Kristalina Georgieva, Commissioner for Budget and Human Resources. (EC Audiovisual Services, 06/11/2014)

Mr Sapin seems to be asking Mrs Georgieva here for a “discount” on France’s contribution to the EU budget, given the severe economic problems in Hexagone. From left to right, Michel Sapin, French Minister for Finance, and Kristalina Georgieva, Commissioner for Budget and Human Resources. (EC Audiovisual Services, 06/11/2014)

Just a few days have passed since an official report by the Directorate General for Economics and Finance Affairs of the European Commission told the world that French economy is stagnating, and the second economic power of the Eurozone is still under the spotlight.

It’s time for the Bundesbank to raise the voice against – or, well, just towards – l’Hexagone and to raise the pressure around its Ministry of Finance. All of German fears are, as usual, concerning flexibility in applying the European Union’s budget rules. Jens Weidmann, the Bundesbank president, criticised last weekend the EU’s decision to give France extra time in order to sort out its budget and fix its excessive public debit. What Mr. Weidmann fears and basically claims is that such decision would damage the credibility of the bloc’s budget rules.

In his recent statement to Le Figaro, it is clear that what he – and Germany – wants to avoid mostly is giving the impression that EU rules are to negotiate. “I would have hoped for clearer decisions”, the head of the German central bank said. “It would be unfortunate if the impression set in that rules are in the end up for negotiation and that budgetary consolidation can be perpetually put off by national governments”, he added.

Mr. Weidmann’s saying came right after global rating agency Fitch downgraded France’s credit rating from AA+ to AA, last Friday, citing its failure to get a grip on its deficit. “The weak outlook for the French economy impairs the prospects for fiscal consolidation and stabilizing the public debt ratio,” Fitch said, cold and clear as it is. The agency also cited predictions on French economy for the year 2015, which say that it will experience lower growth than the Eurozone average “for the first time in four years”.

France recently reduced its forecast for 2015 to 4.1 per cent of GDP from 4.3 per cent, still well above the 3% EU target. Despite this really-not-encouraging signal, at the end of November, the European Commission gave France an extra three months to implement reforms to shrink its budget deficit. And this way comes Mr. Weidmann’s warning. “France announced that it will not reach the agreed deficit goal in 2015 and has clearly put back the envisaged correction of its excessive deficit. For me, that does not strengthen the credibility of EU rules”, he said in his interview to Le Figaro.

A matter of credibility then, as Mr. Weidmann says, and probably a matter of equality in applying rules too. The question on whether the Commission is being too mild with France, as it is the second economy of the Eurozone and historically a country with enormous political power is actually hot. During a recent interview with a Greek newspaper, European Economic and Financial Affairs Commissioner and former Minister of Finance in France Pierre Moscovici has been challenged on the same topic.

When asked if there would be any particular leniency towards France (and maybe not towards countries like Greece), he stressed that equality needs to be guaranteed at all times. “Everybody has to apply the rules, there is no small country, big country, no huge power or a country that can be neglected here”, he said. “The rules have to be applied”, he added. During the same interview, Mr. Moscovici was also asked about France’s credibility in the task of correcting numbers in only three months, after three years have passed. “They probably won’t correct the numbers but they have to show very precisely what structural efforts were made, what reforms are on the table and what kind of macroeconomic impact they can produce”, he told the interviewer. “After that you have some flexibility”, he also declared.

Flexibility, again, sounds like the keyword for the bloc’s future. More broadly, we have countries like Italy on the one hand, with Prime Minister Matteo Renzi calling for Europe-wide pro-growth policies as the solution to cut heavy debts, and France, of course on the other, with officials saying that Europe has to shift away from austerity and stop forcing deficit targets and austerity in a period of low growth and low inflation. Something Mr. Weidmann’s probably will never accept.

The Bundesbank president has always been very harsh on the European Central Bank’s decision to buy private-sector bonds. Just a few months ago he took a hard line against new stimulus just before high-level International Monetary Fund meetings, chastising France for budgetary laxness. He repeated often his fierce opposition to the idea of having the ECB purchasing government bonds, and he also happened to argue with ECB’s president Mario Draghi on this matter.

He also allegedly made the French Finance Minister, Michel Sapin, react angrily to reports that the Commission was preparing to reject France’s 2015 budget; especially because Mr. Weidmann was reportedly very supportive of such measure.

“France needs to serve as a role model”, BuBa’s president used to say in the past.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Next time you fly, could you be boarding a train instead of a plane?

False promises to Small and Medium Enterprises

The Czech economy is thriving but boosting skills and productivity and transitioning to a low-carbon productive model is vital to sustainable and inclusive growth

‘Save Tuvalu; save the world’; UN chief echoes rallying cry from front lines of global climate emergency

This South African lawyer is reading while running marathons – for book donations

‘Proving our worth through action’: 5 things Guterres wants the UN to focus on in 2019

Digital: The EU must set the standards for regulating online platforms, say MEPs

UN Security Council hails ‘courage’ of Afghan voters

Human rights breaches in Azerbaijan and Sudan

There’s a global learning crisis and it’s leaving millions without basic skills

In Christchurch, UN chief calls for tolerance, solidarity to extinguish ‘wildfire’ of hate speech

Building the future of EU strategic foresight – Speech by Vice-President Šefčovič at the annual conference of the European Policy and Strategy Analysis System

Commission launches initiative for more sustainable cocoa production

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

1.1 billion people still lack electricity. This could be the solution

‘Think beyond farm jobs’ to reach sustainable development, UN agriculture chief advises African youth

Girls still being treated as aliens in medicine in the 21st century

5 things COVID-19 has taught us about inequality

COVID-19: Commission provides guidance on EU passenger rights

If you want to make progress on all the major global challenges, start with water

We should treat data as a natural resource. Here’s why

These are the top risks for doing business around the world

Germany may prove right rejecting Commission’s bank resolution scheme

How Asia could be the winner in the US and China’s Belt and Road race

7 steps to becoming a ‘CEO Academy’

State aid: Commission approves amended Estonian scheme worth €450 million to support production of electricity from renewable sources

5 facts to know about Africa’s powerhouse – Nigeria

Does May have enough time in Parliament to table a soft Brexit deal?

This man swam under the East Antarctic ice sheet to highlight the impact of climate change

A 3-step path to securing critical infrastructure

FROM THE FIELD: Conversations about Conservation

EU invests more than €100 million in new LIFE Programme projects to promote a green and climate-neutral Europe

‘Starvation’ now a reality for displaced Syrians stranded in camp near Jordanian border

TTIP is not dead as of yet, the 15th round of negotiations in New York shouts

The unique role of business in building social good

The European Union’s Balkan Double Standard

Sustainable finance: Commission welcomes deal on an EU-wide classification system for sustainable investments (Taxonomy)

We’re all in the same boat on the SDGs. Here’s how we steer a course

COP25: MEPs push for CO2 neutrality by 2050

Anti-Semitism ‘toxic to democracy’, UN expert warns, calling for better education

Universal access to energy is a major challenge for the Arab world. Here’s why

“BRI cooperation is entering a new stage: we need a new and more constructive approach rather than waste time on suspicion”, China’s Ambassador to EU Zhang Ming underlines live from European Business Summit 2019 in Brussels

Cameroon: Clear ‘window of opportunity’ to solve crises rooted in violence – Bachelet

Plenary highlights: Commission changes, EU budget and climate law

Why flexible workspaces are the key to winning the talent war

Syria: UN-backed watchdog says chemical weapon ‘likely used’ in February attack

The world needs a circular economy. Help us make it happen

Alcoholic drinks: Commission tables update of rules governing alcohol excise duties

‘Going green’ is good business says private sector at UN’s COP24 climate conference

The US may be “open” to reviving TTIP, while the EU designs the future of trade with China

State aid: Commission approves €1.2 billion French “Fonds de solidarité” scheme for small enterprises in temporary financial difficulties due to coronavirus outbreak

Coronavirus (COVID-19): truth and myth on personal risk perception

These are the ‘positive’ tipping points that could slow global warming

2019 Innovation Scoreboards: The innovation performance of the EU and its regions is increasing

Summer 2018 Interim Economic Forecast: Resilient Growth amid increased uncertainty

At the age of 50, is Davos going through a midlife crisis?

Deepfake democracy: Here’s how modern elections could be decided by fake news

What if we did everything right? This is what the world could look like in 2050

We’re facing a ‘cold crunch,’ and it’s nothing to do with the polar vortex

England’s beavers are back, and they’ve already made a big impact

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s