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Business

French National Assembly approves EU fiscal treaty

Latest update : 2012-10-09

France's lower house of parliament passed a bill Tuesday to ratify the EU fiscal treaty, approved by a majority of 477 votes to 70 against. The ratification law passes to the Senate on Wednesday and should be adopted before the end of the week.

France's lower house of parliament approved ratification of a European budget discipline treaty by a large majority on Tuesday, paving the way for its adoption in the euro zone's second-biggest economy.

A law ratifying the fiscal pact was passed by 477 votes in favour to 70 against, despite noisy dissent from some left-wingers and Greens that Socialist President Francois Hollande battled to quell in recent weeks.

Of 568 lawmakers present, 21 abstained.

A small but noisy revolt against the treaty has embarrassed Hollande in the run up to an Oct. 18-19 EU summit, at which he is anxious to show his party is behind him on measures agreed in June to deepen economic integration and help pull the euro zone out of crisis.

The Socialists opposed the pact when former president Nicolas Sarkozy signed up to it in March, but Hollande persuaded EU partners at his first summit in June to sweeten it with a package of accompanying measures to stimulate growth in Europe.

Tuesday's vote came as Hollande's fiscal credibility is being tested by a 2013 budget that hinges on an economic growth target of 0.8 percent that many view as over-optimistic. The International Monetary Fund halved its growth forecast for France on Monday to 0.4 percent next year.

The president has promised the European Union he will cut the deficit to 3 percent of gross domestic product in 2013, but the gloomier growth outlook and his decision to make two-thirds of the adjustment through tax rises has raised doubts.

The fiscal pact enters into force on January 1 next year or when 12 out of the 17 euro zone member countries ratify it, as half a dozen, including Germany, have already done.

The ratification law passes to the Senate on Wednesday and should be finally adopted before the end of the week.

(REUTERS)

Date created : 2012-10-09

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