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'End of austerity' in Europe as France gets more time to cut deficit

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French Finance Minister Pierre Moscovici leaves the Elysee Palace following the weekly cabinet meeting in Paris May 2, 2013.  REUTERS/Charles Platiau  (FRANCE - Tags: POLITICS)

French Finance Minister Pierre Moscovici leaves the Elysee Palace following the weekly cabinet meeting in Paris May 2, 2013. REUTERS/Charles Platiau (FRANCE - Tags: POLITICS)

Reuters

French Finance Minister Pierre Moscovici leaves the Elysee Palace following the weekly cabinet meeting in Paris May 2, 2013. REUTERS/Charles Platiau (FRANCE - Tags: POLITICS)

EUROPE'S move to give France two more years to cut its public deficit to below 3pc marks the end of the "austerity dogma" in Europe, French Finance Minister Pierre Moscovici has said.

On Friday, the European Commission gave France two more years to meet its budget deficit target because of the country's poor economic outlook.

"This is decisive, it's a turn in the history of the European project since the start of the euro," Mr Moscovici said.

"We have witnessed the ending of a certain form of financial austerity and the end of the austerity dogma."

President Francois Hollande had appealed for an extra year to bring France's public deficit below 3pc of economic output in line with European targets.

The debate over austerity measures to reduce national debt levels versus policies targeting job creation and growth has fuelled speculation of souring relations between Mr Hollande and German Chancellor Angela Merkel.

Mr Moscovici repeated that France would stick to its target to cut its public deficit to below 3pc of economic output in 2014, but he welcomed the two-year leeway.

"Austerity is over, but we remain serious," he said.

European Union Internal Market Commissioner Michel Barnier, the EU's top financial regulator, has called on Paris to pursue its planned reforms despite the two-year extension on its deficit target.

Politicians in Germany, Europe's biggest economy, which goes to the polls in just under five months, have begun to criticise French policies more openly.

Rainer Bruederle, the lead candidate for the junior coalition partner the Free Democrats, said France was an example of the damage that the wrong policies could do.

"In France, you can see what can happen to an economy that counts on redistribution, higher taxes, shorter working times and a younger retirement age," Mr Bruederle told a party conference.

"It results in less growth, higher sovereign debt and lower competitiveness."

Italy's new deputy economy minister, Stefano Fassina, has said that Rome should also seek two more years to meet its deficit targets.

"If several countries have already won more time to meet the 3pc deficit target (of GDP), why not Italy?" he said. (Reuters)

Irish Independent