France given two more years by Brussels to sort out its budget deficit
FRANCE will get two more years to meet its budget-deficit target because of the country's poor economic outlook within a recession-hit eurozone, the European Commission said yesterday.
Presenting economic forecasts for the next two years, Olli Rehn, the European monetary affairs commissioner, also confirmed earlier statements that Spain would get the same leeway.
Others, including the Netherlands, Slovenia and non-euro-zone Poland, are likely to get an extra year to get their budget gaps below the 3pc of gross domestic product European Union ceiling. The formal decision will be announced on May 29, when the commission will makes macro-economic recommendations.
"France badly needs to unlock its growth potential and create jobs," he said, as he announced that Spain, Italy and the Netherlands as well as France – four of the eurozone's five largest economies – would remain in recession this year.
The granting of more time is a victory for French President Francois Hollande, who won elections promising a focus on growth and less on austerity but has little to show for his economic policies after a year in office.
The extra time also underlines a shift of focus in the 17 countries that share the euro, from sharp fiscal consolidation in the first years of the sovereign debt crisis to economic growth, as earlier radical deficit cuts and European Central Bank action restored some market trust in eurozone finances.