France will not ratify current EU fiscal pact

New finance minister Pierre Moscovici says eurozone pact must be renegotiated to promote growth rather than austerity.

Francois Hollande met Angela Merkel hours after being sworn-in as France's new president [AFP]

France will not ratify the European Union’s pact on fiscal discipline unless it is amended to include ambitious commitments to promote economic growth, the country’s new finance minister, Pierre Moscovici, has said.

“What we’ve said is the treaty will not be ratified as it stands,” Moscovici told France’s BFM TV on Thursday. “We’re firm on this.”

Moscovici, part of a new left-leaning government formed after the swearing-in of Francois Hollande as president this week, took over from his conservative predecessor Francois Baroin on Thursday.

The new French team was committed to serious management of public finances but also wanted a strong pro-growth strategy in Europe, he said.

Laurent Fabius, who takes over from Alain Juppe as foreign minister, also emphasised France’s need for economic growth.

“Something that we, the French, totally agree with is the idea of budgetary firmness, but we point out that one needs two legs to be able to walk,” he said. “There is one leg for the budgetary strictness, and and there is one leg for growth. For the moment the budgetary firmness is here, present in certain texts, but the leg for growth is not there.”

Ministers have been ordered to take a 30 per cent reduction in their salaries.

 Hollande in US for G8 and NATO summits

Hollande, France’s first Socialist president for 17 years, had long made his position clear on a pact that his predecessor, Nicolas Sarkozy, signed with other European leaders in March.

‘Ambitious growth strategy’

Hollande discussed the issue with German Chancellor Angela Merkel in person within hours of his swearing-in this week, Moscovici said.

“It [the pact] must be fleshed out with a part on economic growth, and when I say that, we’re talking about an ambitious growth strategy,” Moscovici said.

“What we are saying – and we are all very pro-European, Francois Hollande is very European, [prime minister] Jean-Marc Ayrault is very European and I am very European – is that we must take the construction of Europe in a new direction, not to shrug off budgetary responsibility … for us budgetary responsibility and economic growth are not opposites.”

Moscovici, who was a junior European affairs minister in the last left government of 1997-2002, said Merkel and Hollande had looked at a number of growth-promoting options.

Strategies included greater use of European structural development funds and funding by the European Investment Bank, but also so-called project bonds, pooled European debt finance for growth-promoting projects.

The new minister, comfortable speaking in English, said he was ready if asked to travel to the US with Hollande, who leaves after a first cabinet meeting on Thursday to attend G8 and NATO summits on the other side of the Atlantic.

“With the United States we have the same desire to rekindle global economic growth, because everything else becomes more difficult without growth,” he said, noting that Hollande would be meeting one-on-one with US President Barack Obama during the trip.

Source: News Agencies