"What people underestimate is that what's at stake is the entire credibility of the rules," warns one EU official as The WSJ reports, is preparing to reject France’s 2015 budget, that would be the biggest test yet of new powers for Brussels that were designed to prevent a repeat of the eurozone’s sovereign-debt crisis. With the looming handover to former French FinMin Pierre Moscovici (fox, henhouse?) it appears the current European Commission will not stand for Current French FinMin Sapin's plan that would run a budget deficit of 4.3% of GDP next year (far greater than the 3% deficit it had previously promised) put France’s budget in "serious noncompliance" with the new EU rules and risking sanctions of as much as 0.2% of GDP. The credibility of Brussels' new powers threatens to be seriously undermined if big countries such as France and Italy are able to flout the new rules as "it’s not like they will try - and fail; they're actually planning not do it," another EU official said.
Germany already expressed its open hostility to both France's budget recklessness and putting a French minister in charge of EU financial planning... Germany's finance ministry exclaimed:
German Finance Minister Wolfgang Schaeuble on Tuesday rebuffed calls for Berlin to spend more to boost the euro zone economy, insisting on the need for painful structural reforms.
- *GERMAN MINISTRY 'CERTAIN' FRANCE 'AWARE OF ITS RESPONSIBILITY'
- *GERMAN MINISTRY SAYS EUROPE NEEDS FRANCE TO HAVE STRONG ECONOMY
Upholding the EU deficit-busting rules will now fall to Sapin's Socialist predecessor, Pierre Moscovici, an advocate of Keynesian demand-led economics, who was appointed European Commissioner for economic and monetary affairs in the new EU executive team unveiled on Wednesday.
Germany was not happy:
- *GERMAN CDU LAWMAKER BARTHLE SAYS MOSCOVICI NOMINATION NOT A WISE DECISION
German lawmaker Norbert Barthle from Chancellor Angela Merkel’s Christian Democratic Union says appointment of Pierre Moscovici as European Union Economic and Monetary Affairs Commissioner not “a wise personnel decision.”
In e-mailed statement, Barthle also says:
“It will be interesting to see how Mr. Moscovici will deal with France’s excessive deficit”
“It’s now up to the commission to assess a delayed adherence to the 3% deficit limit and, where appropriate, take further steps against the country”
“This is where Mr. Moscovici can show that he really represents the interests of Europe”
And now, as The Wall Street Journal reports, the European Union is preparing to reject France’s 2015 budget, according to European officials, setting up a clash that would be the biggest test yet of new powers for Brussels that were designed to prevent a repeat of the eurozone’s sovereign-debt crisis.
French Finance Minister Michel Sapin said last month that his country would run a budget deficit of 4.3% of gross domestic product next year—far from the 3% deficit it had previously promised.
That could put France’s budget in “serious noncompliance” with the new EU rules, likely leading the commission to send it back to Paris for revisions, European officials said. So far, the French government has said it won’t take any extra measures beyond what it proposed in the spring, indicating it is ready to risk a public clash with Brussels.
The conflict with France could be joined by a budget fight with Italy, which has also said that it will miss agreed budget targets. Italy has more leeway because its past budgets have run lower deficits than France’s, but a senior EU official called a decision about whether to confront Italy “borderline.”
The credibility of Brussels’ new powers threatens to be seriously undermined if big countries such as France and Italy are able to flout the new rules - which give the European Commission the right to demand changes to proposed budgets before they are presented to national parliaments. It would signal the tough budget regime can only be imposed on the eurozone’s smaller economies, such as Greece and Portugal.
Paris and Rome argue that it makes no sense to cut budgets further in the face of their deteriorating economic outlooks. European policy makers are conscious that anti-EU sentiment in France is running high, and rejecting the budget could play into the hands of the far-right anti-EU National Front party of Marine Le Pen.
What makes France’s 2015 budget different, though, is that the budget overruns are apparent already now... “It’s not like they will try and fail; they’re actually planning not do it,” another EU official said.
* * *
European Dis-Union at its best...