Paris pushes back on EU budget warning

Bruno Le Maire defends ‘political choice’ based on the economy.

France’s finance minister today pushed back on EU warnings that his budget plans for 2020 run the risk of a “significant deviation” from the bloc’s spending-and-debt rules.

Bruno Le Maire defended Paris’ “political choice” to cut taxes and spend more, in a statement pointing to economic weakness and trade tensions as justification for stimulus.

“In a period of economic slowdown, we have chosen to lower French taxes and change the pace of fiscal consolidation,” he said. “It is a political choice that we made to take into account the social situation in France and the international economic context.”

Le Maire’s comments come the same day that the European Commission published its reactions to EU countries’ draft budget plans, as part of the so-called Stability and Growth Pact.

Brussels sent similar warnings to Italy, Spain, Belgium, Finland and Portugal. They have until Wednesday night to respond with clarifications.

EU spending rules demand that governments keep their public debt below 60 percent of gross domestic product and cap their budget deficits at 3 percent of economic output.

Defying Brussels can lead to red flag warnings for financial markets and a potential fine.

German conservative lawmaker Markus Ferber was far from impressed with France’s and Italy’s budgets.

“Both the Italian and the French government come up with a new reason every year why complying with the deficit reduction is just not possible this year,” he said. “The European Commission has to bring this kind of behaviour to an end.”

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