The Sunday Business Post October 5, 2014

Sean Whelan: Ordered to obey strict austerity measures like everyone else, France
nonetheless said non. Italy has followed suit
Perhaps we should be more continental

It is, of course, a lot easier to defy the EU’s budget rules when you have a fleet of nuclear

submarines at your disposal. Still, France has gone ahead and given the two fingers to

Brussels, prompting some to talk of a declaration of independence, and others (more

prosaically) to recall 2003 and the wrecking of the original stability and growth pact.

Like ourselves, France is supposed to get its deficit down below 3 per cent next year. But

in his draft budget on Wednesday, the French finance minis¬ter Michel Sapin said he is

not going to. France will run a 4.3 per cent deficit next year – a whole 0.1 per cent better

than this year – because, it says, aus¬terity is not right for France.

2017 is the new date for a sub-3 per cent deficit in France, though the French version of

the fiscal advisory council has its doubts about the growth needed for this.

The Italians, who lack nuclear weap¬ons, have nevertheless said much the same thing in

their budget draft: stuff this austerity thing, we need some cash – ostensibly for growth-

promot¬ing reforms – but cash, anyway.

That two of the big three states of the eurozone have decided to defy the rules should

make for an interesting Ecofin council in November, when ministers get together to

review each others’ draft budgets. It has already poisoned the political atmosphere in the

European Parliament, where Pierre Moscovici faced a torrid hearing in his bid to

become economics commis¬sioner. Having failed to meet the defi¬cit rules as finance

minister in France, Moscovici is now supposed to be the budget enforcer for

everyone else.

Does all of this herald an almighty Euro-row in the weeks before Christ¬mas, potentially

destabilising not just for the stability pact, but the currency and the bond market? More

importantly, what’s in it for us?

Michael Noonan and Brendan Howlin went in opposite directions when I asked them

about the French budget.

Noonan said the rules were the rules, they applied equally to big and small, and they

had to be adhered to for the good of all. Howlin, meanwhile,, who met Sapin and his

budget minister in Paris three weeks ago, was less certain – given the choice between a

rules-compliant (and therefore con¬tractionary) France or an expanding France, he sees

growth there as being good for Ireland

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