Economy

EU certifies Macron has delivered on deficit promise

France’s deficit has fallen below 3% benchmark for first time in decade

French President Emmanuel Macron has linked fixing the deficit with restoring France’s credibility as an equal partner to Germany in the EU. Photograph: Getty

Wed May 23 2018 - 12:19

Emmanuel Macron has fulfilled a key campaign promise to finally get France back into line with EU budget rules, after the European Commission recommended that the country's "excessive deficit procedure" be closed.

The move reflects the fact that France’s deficit last year fell to 2.6 per cent, making it the first time in a decade that it was under the EU’s 3 per cent benchmark. It was a period marked by repeated failings of successive French governments to respect deadlines agreed with Brussels for bringing the deficit into line.

The commission’s announcement is a boost for Mr Macron, who has linked fixing the deficit with restoring France’s credibility as an equal partner to Germany in the EU.

The French president indicated last week that France’s moves to put its house in order had given it leverage in its efforts to negotiate euro zone reforms with Berlin.

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Speaking in Sofia, Mr Macron said that “I expect a lot from the German response” to Paris’ euro reform proposals.

“France has proposed, France has reformed, France has waited. This coming summer is a moment of truth,” he said.

Lehman Brothers

The last time France's deficit was below the 3 per cent level was in 2007, before the collapse of Lehman Brothers and the start of the global financial crisis.

Brussels welcomed the improvement as a strong signal of the euro area’s economic recovery. The decision on France, once endorsed by national governments in the coming weeks, will mean that only one country, Spain, is left inside the excessive deficit procedure, compared with 24 countries in 2011.

Pierre Moscovici, the EU's economy commissioner and a former French finance minister, said that France's "deficit reduction path is strong and clear" and "is sustainable for 2018 and 2019."

He said that the decision meant “the end of nine long years” of France’s excessive deficit procedure, during which “difficult and painful” steps had to be taken. – Copyright The Financial Times Limited 2018

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