Open

Coming up

Don't miss

Replay


LATEST SHOWS

AFRICA NEWS

Air Algerie investigation continues

Read more

AFRICA NEWS

Dozens of youths trampled to death on Conakry beach

Read more

AFRICA NEWS

Ebola death toll tops 700

Read more

MEDIAWATCH

UNRWA official breaks down over Gaza deaths

Read more

DEBATE

Argentina Defaults - Kirchner Cries Foul Over 'Vulture Funds' (part 2)

Read more

DEBATE

Argentina Defaults - Kirchner Cries Foul Over 'Vulture Funds'

Read more

MEDIAWATCH

Renault's women drivers ad deemed sexist

Read more

FOCUS

Constitution prohibits Aung San Suu Kyi to run for president

Read more

THE BUSINESS INTERVIEW

War and Markets, with Steen Jakobsen, Chief Economist at Saxo Bank

Read more

  • Israel and Hamas 72-hour ceasefire begins

    Read more

  • 24 killed¸ 271 injured in South Taiwan gas blast

    Read more

  • Argentinian markets plummet following default

    Read more

  • Interactive: France’s new plan to counter jihadism in Africa

    Read more

  • French Jews speak of growing fear in Paris amid Gaza conflict

    Read more

  • Video: Inside Hamas ‘terror’ tunnels in Gaza

    Read more

  • Sierra Leone declares state of emergency over spread of Ebola

    Read more

  • Investigators reach MH17 site amid 24-hour ceasefire

    Read more

  • France remembers murdered socialist hero Jean Jaurès

    Read more

  • Air France ground workers to strike on August 2

    Read more

  • Scores feared dead in India landslide

    Read more

  • Russia ordered to pay further €1.9 billion to Yukos shareholders

    Read more

  • Iraq's Christians: Nowhere to Run?

    Read more

  • Russia defiant as US, EU unveil 'phase three' sanctions

    Read more

  • US House votes to sue Obama for over-reaching his powers

    Read more

Europe

France must cut spending and reform pensions, says EU

© afp

Text by FRANCE 24

Latest update : 2013-05-29

The EU said Wednesday that France must start reforming pensions, cut spending and simplify corporate taxes this year if it wants more time to slash its budget deficit. President Francois Hollande responded by saying the EU could not "dictate" orders.

France must this year start to reform its pension system, rein in public spending and further cut labour costs in return for getting two more years to bring its budget deficit back in line, the European Commission said on Wednesday.

France must also simplify its tax system to help companies, and should use all windfall gains for deficit reduction, the Commission, the European Union’s executive body, said in its annual assessment of EU economies.

RECESSION ‘NOT AS DEEP AS 2008 & 2009’

President François Hollande admitted May 15 that France’s economic situation was “grave”, but noted that the new recession was not as deep as the levels reached in 2008 and 2009. He said the downturn was due in part to a “drop in European demand”.

Hollande, who is experiencing the lowest approval ratings of any modern French president, added that his country's economy was still better off than those of some of its European neighbours.

“The pension system will still face large deficits by 2020 and new policy measures are urgently needed to remedy this situation,” the Commission said.

Possible measures included adapting indexation rules, increasing the statutory retirement age and full-pension contribution period, “while avoiding an increase in employers’ social contributions”, the Commission said.

French President Francois Hollande responded to the statements by saying the EU could not "dictate" orders.

"The European Commission cannot dictate to us what we have to do,” he said. “It can simply say that France must balance its public accounts.”

The Commission said it expected France’s unemployment rate to be 10.6 percent this year and keep increasing to reach 10.9 percent in 2014 – contrary to the government’s stated promise of halting the rising trend by the end of this year.

The EU executive wants France to cut its headline deficit to 3.9 percent of output in 2013, 3.6 percent in 2014 and 2.8 percent in 2015.

“In particular, it is crucial that France’s public spending grows significantly less rapidly than potential Gross Domestic Product as improvements in the structural deficit have so far been mainly revenue-based,” it said.

European Commission President Jose Manuel Barroso told a news conference the message to France was “very demanding”.

“The extra time should be used wisely to address France’s failing competitiveness ... I believe there is a growing consensus now in France about the need for those reforms,” he added.

French officials say that Francois Hollande’s government has already put reforms in motion – from pension to labour rules – and will continue at its own rhythm, which includes seeking deals between unions and employers to try and reach as broad a consensus as possible and avoid possible street protests.

Paris has said it can get its budget deficit back in line with targets as early as next year but the Commission warned that would require too much belt-tightening and so threaten an economic recovery.

Talks among labour unions and employers to reform the pension system, for instance, will kick off in June and will not be passed into law until the second half of the year, meaning the government cannot yet exactly predict its content.

The French economy, which has been stagnating since its last recession four years ago, contracted again in the past two quarters while the number of jobless has hit an all-time high.

The government acknowledged earlier this year that it would not bring its deficit below the EU threshold of 3 percent of GDP this year and slashed its growth forecasts.

(FRANCE 24 with wires)

 

Date created : 2013-05-29

  • FRANCE

    Hollande calls for EU 'economic government'

    Read more

  • FRANCE

    French govt backs 75% tax rate, scraps exec pay cap

    Read more

  • FRANCE

    French economy falls back into recession

    Read more

COMMENT(S)