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Friday, March 29, 2024

Toothless Barking Dogs; Don’t Like the Rules? Then Ignore Them: French Style

Courtesy of Mish.

Don’t Like the Rules? Then Ignore Them: French Style

When it comes to fiscal policy in the EU, you can break whatever fiscal rules you want, provided you are big enough.

France qualifies, so does Germany. If you are small like Greece and Cyprus, then you may find yourself in bed with the Troika.

For the third time France Warns of Budget Overshoot

France has declared it will heavily overshoot its already twice-delayed budget deficit target next year, setting up tough negotiations with European partners previously reluctant to grant Paris more time to bring its public finances within EU limits.

Michel Sapin, finance minister, announced that the required deficit target of 3 per cent of national output was being pushed back a further two years to 2017 in the latest sign of the deep-seated economic problems confronting President François Hollande and his socialist government.

Mr Sapin said the deficit would reach 4.3 per cent of gross domestic product in 2015 after a level of 4.4 per cent this year – the latter also a big overshoot of earlier estimates and the first annual rise in the deficit for several years.

He blamed the situation on the slow rate of economic growth and low inflation, saying France demanded that the EU “collectively take into account” an economic slump “unprecedented in recent European history”.

Joke of the Day

The German finance ministry said: “We assume that all member countries of the eurozone stick to the rules. Otherwise we risk our credibility.

Credibility? What credibility? How can anyone speak about credibility when France , Spain, and Italy miss deficit targets over and over and over again?

Toothless Howling Dogs

Like toothless howling dogs, Eurozone Leaders Warn on Fiscal Rules, shortly after the French budget announcement.

Eurozone leaders warned the currency bloc risks facing a new market backlash if it strays from its fiscal rules, an apparent message to France and Italy that their push for more flexibility will be viewed sceptically when they submit their budgets to Brussels next month.

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