France 'wants referendum' on fiscal rules

Tue, Feb 14, 2012, 00:00

The French government wants to hold a referendum on whether to write fiscal balancing rules into the constitution and avert a parliamentary vote certain to reject the measure, Prime Minister François Fillon was quoted as saying today.

President Nicolas Sarkozy began to push for the "golden rule" - a statute forcing governments to maintain a balance budget - last summer as France came under pressure to prove it was committed to balancing its books.

The measure has been approved in both houses of parliament but still awaits passage in a special joint session required to change the constitution.

Without support from the Socialists, who have promised to vote it down, the government lacks the qualified parliamentary majority needed for a constitutional amendment.

"Regardless of your opinion, we will have to resort to the referendum," sources quoted Fillon as telling the conservative UMP ruling party at a meeting today.

"The development of European institutions, as well as the decisions taken during the financial crisis, make using the referendum necessary, for example on the golden rule."

However, with a presidential election less than 80 days away, any plans for a referendum on the golden rule would have to wait until after the vote.

Borrowed from Germany, which wrote a "debt brake" into its own constitution in 2009, the French version would force any government to write budgets that would return to a balance at the end of a three-year cycle.

The constitutional council would hold veto power over any budget that does not respect the framework.

However, while Germany's constitutional debt brake rule caps new federal borrowing at 0.35 per cent of GDP from 2016, forcing Berlin to reduce its structural deficit by a set amount over the years ahead, France's proposal leaves it to future governments to set the numerical rules for each successive deficit-cutting plan.

The Socialists, who won a majority in the Senate in September, are opposed to Mr Sarkozy's version of the golden rule.

Socialist leader and presidential front-runner Francois Hollande has said Mr Sarkozy's proposal was too vague and should be discussed during the election campaign rather than imposed on the French before the vote.