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EU hands France’s Macron deficit victory

The EU officially recommended that France be removed from Brussels’ public spending penalty box after more than a decade, handing a win to French President Emmanuel Macron in his push to gain the trust of austerity-pushing Germany.

The European Commission, the EU’s executive arm, formally proposed to take France out of the so-called excessive deficit procedure that was first opened in 2009 at the start of the eurozone debt crisis.

“It is an important moment for France after nine years of a long, painful procedure and sometimes painful but necessary budgetary efforts,” said EU

Economic Affairs Commissioner Pierre Moscovici at a news briefing.

The European Commission forecasts that France will hit a deficit of 2.6 per cent of GDP in 2017, below the EU’s three per cent limit.

This would be followed by 2.3 per cent in 2018, then 2.8 per cent in 2019, the European Commission estimated in its latest economic forecasts.

Macron saw lowering the deficit as key to earning credibility with European leaders, especially German Chancellor Angela Merkel, as he pushes ambitious reforms to the eurozone.

France was one of the last two countries in the eurozone, along with Spain, still under the threat of the excessive deficit procedure, which can lead to sanctions and fines.

But eyes are now turning to Italy, whose populist and eurosceptic government has promised to flout EU budget rules, which also include a 60 per cent of gross domestic product (GDP) cap on public debt.

The commission’s proposal on France will have to be formally endorsed by EU finance ministers at a meeting in July.

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