French Socialist presidential frontrunner Francois Hollande said he disagrees with European Central Bank President Mario Draghi’s methods for fueling economic growth in the region.
The ECB president yesterday called for a “growth compact” alongside the fiscal treaty agreed to by the 17 nations sharing the euro. The proposal was endorsed by German Chancellor Angela Merkel, who said she supports Draghi’s growth push “in the form of structural reform.” While Hollande welcomed Draghi’s remarks as evidence of the need for treaty changes to boost growth, he questioned the means of getting there.
“It’s not the same idea of growth,” he said today in an interview on France Info radio. Draghi is “adding even stronger competition, liberalization and privatization.”
Euro leaders have struggled to find a way to promote economic growth even as they have demanded budget cuts to satisfy German priorities and settle markets. At a March 2011 summit, the leaders, including French President Nicolas Sarkozy, endorsed Merkel’s so-called competitiveness pact that set targets on issues including cutting labor costs and raising the retirement age.
Hollande said yesterday that France won’t ratify the fiscal pact in its current form if he is elected, putting him on a collision course with Merkel, who has championed debt reduction as the key to ending the region’s fiscal crisis.
The Socialist candidate, who got 28.6 percent in the first round of the election on April 22, and Sarkozy, who won 27.4 percent, will square off in the decisive second round on May 6. Hollande is supported in his re-election bid by Communist Party-backed, anti-austerity candidate Jean-Luc Melenchon, who got 11.1 percent of the vote in the first round.
Hollande will beat Sarkozy by 56 percent to 44 percent in the final round, according to surveys by the polling companies CSA and Harris Interactive.
Hollande said while he would advocate a different path for growth, Draghi’s comments yesterday were a step in the right direction.
“There is a very big change in the mindset,” Hollande said. “He has realized that we can’t reach deficit-reduction targets and debt control if there isn’t growth so he is talking about a growth pact.”
The French Socialist reiterated his call for fueling growth through existing funds and new sources that would be generated from measures such as eurobonds and financial-transaction taxes.
Hollande has said he’ll seek to add growth and investment measures to the fiscal treaty.
At home, Hollande, 57, has promised to slash France’s budget deficit to 3 percent of gross domestic product next year and to eliminate it by the end of the next presidential mandate in 2017.
He wants to hire 60,000 teachers and public school employees and 5,000 police officers over the next five years and pull back the retirement age to 60 from 62 for some people.
In a separate interview on France Inter radio, Sarkozy said there will be “no turning back” on targets to cut budget deficits.
He said the government should focus on increased job training and industrial innovation to boost growth, not higher spending. Sarkozy said France has managed to cut its state deficit faster than targeted without austerity measures such as cutting civil servant pay or pension payments.