The fiscal suicide pact whose French ratification Hollande just foolishly and irresponsibly agreed to support only compounds these problems, restricting the country's ability to run fiscal deficits to stimulate the economy even during a depression like this one.
As Mark Deen and Helene Fouquet report for Bloomberg News, Hollande Needs EU43 Billion 2012-13 Savings, Auditor Says 07/02/2012, France's national auditor is projecting a substantial deficit that exceeds the EU deficit guidelines, which the fiscal suicide pact will make even more severe:
The auditor’s report comes before Prime Minister Jean-Marc Ayrault lays out an economic plan tomorrow and Finance Minister Pierre Moscovici details a revised budget the following day. Taken together, the events will mark Hollande’s effort to get to grips with France’s budget deficit as growth stalls, after being elected on an anti-austerity platform.Especially after Hollande let Angie steamroll him so easily at last week's EU summit, French voters have good reason to worry that the Finance Minister's nonsensical, "There will be tax increases, there will be spending cuts. But I reject any talk of austerity." The ludicrous formula of stimulus plus austerity is just the latest marketing device for Angienomics. It's notable that the Finance Minister's quote comes from last week before the EU summit.
"There will be tax increases, there will be spending cuts," Moscovici said June 25. "But I reject any talk of austerity. We must avoid a budget policy that hurts economic activity."
The auditor said today that France needs between 6 billion euros and 10 billion euros in savings this year and 33 billion euros in 2013 to meet deficit-reduction targets. France’s deficit last year amounted to 103 billion euros and the public spending of the government was 358 billion euros, excluding local government and social security.
Were Hollande and his Socialist Party in the least serious about his campaign opposition to austerity economics?
Tags: angela merkel, austerity economics, eu, euro, european union, france, françois hollande