France will do what is needed to meet euro-area budget goals, Dutch Finance Minister Jeroen Dijsselbloem said today.
“It’s going to be an effort but I think it’s doable and I think the new French government will deliver on this,” Dijsselbloem, who heads the euro-area finance ministers group, said in a Bloomberg Television interview in Washington.
The remarks suggest President Francois Hollande’s government may be finding ways of meeting the European Union’s deficit-cutting schedule as the economy revives following a two-year stall.
After a rout of his Socialist Party in local elections, Hollande suggested March 31 that he would seek a delay from the European Commission in reducing the French budget deficit to 3 percent of gross domestic product by 2015.
Just four days ago, Finance Minister Michel Sapin indicated the same in Berlin. Since arriving in Washington, though, Sapin has turned more positive. Yesterday he told reporters that the goal of reducing the shortfall “is a target that we must maintain.”
Even so, promises for tax cuts announced by Hollande’s government mean that he and Sapin need to find about 20 billion euros ($28 billion) in savings to hit the EU objectives, estimates Barclays economist Fabrice Montagne.
France’s public deficit amounted to 4.3 percent of GDP in 2013 instead of the 4.1 percent target set in September, national statistics office Insee said last month. The 4.1 percent goal had already been watered down from the 3.7 percent 2013 deficit Hollande had promised in April last year.
Dijsselbloem said recovery from Europe’s sovereign-debt crisis means countries, including the Netherlands, that have received budget-deficit extensions can now move forward because the economic outlook is turning around.
“Things are changing now, we now have the growth,” Dijsselbloem said. “France has had two years extension in their budget targets and I think, and I’m fully expecting this, that the French government will step up its efforts in order to deal with the budget issue.”
Sapin said yesterday his country needs to stick to a budget deficit target next year of 3 percent of gross domestic product to follow EU rules. The goal to reduce the shortfall from 4.3 percent in 2013 “is a target that we must maintain,” he told reporters. “This is in the feasible range.”
Dijsselbloem also expressed confidence in new Italian premier Matteo Renzi, who this week cut his government’s forecast for economic growth and renewed his promise to slash benefits for top civil servants. The outlook for Italy is “optimistic” because of the government’s commitment to overhaul the economy, the Dutch finance chief said.
“This new government is very ambitious and very committed, knowing what to do,” Dijsselbloem said. “If you hear Prime Minister Renzi talking about this, he has very strong focus on the key issues which are basically key issues for all of Europe: strong growth, more productivity, bringing up investment and at the same time keeping a close eye on budget consolidation.”