Europe: no preferential treatment on a French deficit

Emmanuel Macron’s emergency measures will lead to a breach of the European rule of 3% deficit.

France and Italy, same price? Two days after the announcement of Emmanuel Macron in response to the crisis of yellow vests, the European Commissioner for Economic Affairs Pierre Moscovici said that France would not benefit from preferential treatment in case of slippage of its deficit. “There is no double standard, the rules are the same for everyone,” said Pierre Moscovici on the sidelines of a conference organized by the Financial Times in Frankfurt.

“It is out of the question to have a privileged treatment for some and overly harsh for others, even if [the rules] are quite subtle and complex, I agree,” continued Pierre Moscovici, while Italy, in the thick of the budget with Brussels, fears unequal treatment. “I refuse to imagine that we pretend nothing in front of the requests ‘billionaires’ coming from a Macron in obvious difficulty and that we take the pockets of the Italians”, indeed warned this Wednesday the vice – Italian Prime Minister Matteo Salvini.

3.4% deficit

Tuesday, the Minister of Public Accounts GĂ©rald Darmanin has quantified the Senate to 10 billion euros the cost of emergency measures and recognized that the budget deficit will reach 3.4% next year if saving measures are not taken. However, the European rule limits the public deficit of a country to 3% of its GDP. Barely a year after leaving the procedure for the excessive deficit, France would be close to the limit of 3.5% which would force the automatic reopening of a new procedure.

Pierre Moscovici reiterated that the rules of the European Stability Pact in some cases allowed budget slippages. A “temporary, limited and exceptional” deviation from the 3% limit is “conceivable”, the EU commissioner reaffirmed, as long as this excess does not last two consecutive years and does not exceed 3.5% over one year. “The European Commission understands that in the face of social movements and very strong demands to reduce the territorial or social divide, a government may have to take action,” he conceded.

130% debt

Italy’s budget proposal for 2019, which nevertheless provides for a deficit of 2.4%, was rejected by Brussels because of the weight of the public debt. The sources consulted by AFP recall that France does not have the same debt as Italy: a little less than 100% against more than 130%.

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A new “working meeting” is scheduled for Wednesday between the head of the Italian government, Giuseppe Conte, and the President of the European Commission, Jean-Claude Juncker. As for the French budget, the European Commission gives itself until the spring to analyze it, said Tuesday the spokesperson of the European executive. “The final budget” of France “will be analyzed in the spring when we publish our economic forecasts,” said Margaritis Schinas at a press point in Strasbourg.