France gets two more years to cut deficit

EUROPEAN UNION finance ministers gave France two more years yesterday to cut its budget deficit to within EU limits, extending the deadline for the third time since 2009 as Paris struggles to enact reforms.

The eurozone’s second biggest economy has repeatedly missed deadlines and budget consolidation targets and, under EU budget rules sharpened during the sovereign debt crisis, was facing fines of up to 4 billion euros (£2.85bn) by late last year.

But the European Commission, which prepares the ministers’ decision, recommended an extension of the deadline to 2017 from 2015 to give Paris more time to implement reforms and cut spending at a time of weak economic growth and low inflation.

“The two-year extension in the excessive deficit procedure for France is approved,” an EU official said.

The Commission recommendation sparked controversy among some smaller eurozone countries and within the Commission itself, because many policy-makers see it as undermining the credibility of the rules set out in the EU’s Stability and Growth Pact.

European Central Bank Executive Board member Benoit Coeure said the eurozone should not create a perception that it was unravelling its own rules or that laws were applied differently for big and small countries.