France says no to treaty without EU growth pact

Fri, May 18, 2012, 01:00

FRANCE’S NEW finance minister, Pierre Moscovici, has insisted France will not ratify the fiscal treaty unless an EU growth pact is agreed.

While the French government supports the contents of the fiscal treaty, including its tight limits on national deficits and debts, it wants to see a deal agreed on a package of measures to promote growth.

“What we’ve said is the treaty will not be ratified as it stands,” Mr Moscovici said, before the new cabinet held its first meeting yesterday. “We’re firm on this.”

Advisers to president François Hollande have told The Irish Times he has an open mind on what legal form a growth pact could take, with options including a protocol to the fiscal treaty, a separate text or a political declaration.

The Irish Government says it believes the French position should not disrupt Ireland’s referendum on the treaty, scheduled for May 31st, because any new growth measures would not have “constitutional consequences” for Ireland.

“It [the pact] must be fleshed out with a part on economic growth, and when I say that, we’re talking about an ambitious growth strategy,” said Mr Moscovici.

“For us budgetary responsibility and economic growth are not opposites,” he said.

Mr Moscovici pledged to act on Mr Hollande’s election promise to bring the public finances under control and balance the national budget within five years.

“We’re convinced public debt is an enemy for the country. Our task will be to reduce deficits and debt . . . this is the task we will address first.”

In a symbolic gesture, the new government’s first decision yesterday was to sign off on a pay cut that will trim ministers’ salaries by 30 per cent. The change will reduce the gross pay of ministers to €9,940 a month from €14,200 and cut the salary paid to both Mr Hollande and prime minister Jean-Marc Ayrault to €14,910 a month, from €21,300.

Only five of the 34 ministers have held national government posts before, but several key jobs have gone to Socialist Party veterans, including Laurent Fabius, who was prime minister in the 1980s.

Mr Fabius, who defied Mr Hollande, then party leader, by campaigning for a No vote in a referendum on a European constitution in 2005, brushed off the episode as he took up his post at the foreign ministry.

“That’s behind us now,” he said. “What it’s about now is pulling out of the crisis and building something different.” Mr Fabius insisted the government would be serious about financial restraint while trying to prevent austerity on a scale that could be self-defeating. “You have to walk on two legs,” he said.

“Budget discipline is one leg and the other leg is economic growth. For now the growth leg isn’t there.”