French EU Budget Chief Prompts German Discipline Demands

Former French Finance Minister Pierre Moscovici’s appointment as the European Union’s top budget watchdog drew criticism in Germany and a reminder by the government for France to curb its fiscal deficit.

As incoming European Commission President Jean-Claude Juncker appointed Moscovici, his successor as finance minister, Michel Sapin, said that France’s budget deficit will widen for the first time in five years, to 4.4 percent of gross domestic product in 2014 from 4.3 percent in 2013.

“I don’t think that the appointment of Pierre Moscovici as economic and monetary affairs commissioner was a wise personnel decision,” Norbert Barthle, German Chancellor Angela Merkel’s budget policy spokesman in parliament, said in an e-mailed statement. “It will be interesting to see how Mr. Moscovici will deal with France’s excessive deficit.”

Juncker’s choice may heighten tension between policy makers in the EU’s two biggest economies after the commission allowed French President Francois Hollande twice to delay deficit targets in the wake of Europe’s sovereign-debt crisis.

“We are certain that France is aware of its responsibility,” the German Finance Ministry said in an e-mailed statement that urged EU members to fulfill euro-region deficit rules or risk losing credibility in financial markets. “Europe needs France to be economically strong.”

Sapin said that the deficit will be 4.3 percent of GDP in 2015 and won’t drop below the EU limit of 3 percent before 2017. In the first half of 2011, then-President Nicolas Sarkozy was promising that France would reduce its budget deficit to 3 percent of GDP in 2013.

French Victory Seen

“The French have prevailed again,” Lueder Gerken, head of Freiburg-based CEP research institute, said in an e-mailed statement. “The Stability and Growth Pact leaves much room for interpretation” and Moscovici, “who so far hasn’t distinguished himself as a follower of structural reforms and budgetary discipline,” now has that power, Gerken said.

Merkel, during a budget debate in Germany’s lower house of parliament today, said adhering to EU rules must be the “hallmark” of policy making, even as Europe’s economic situation remains “fragile.”

“It’s now up to the commission to assess a delayed adherence to the 3 percent deficit limit and, where appropriate, take further steps” against France, Barthle said. “This is where Mr. Moscovici can show that he really represents the interests of Europe.”

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