EU ger Frankrike grönt ljus för budgeten; “France has always been able to get away with it because it is France,” said Bernard Connolly

Det sa Frankrikes finansminister Eric Lombard på tisdagen, efter mötet med EU:s finansministrar, enligt Bloomberg News.

Enligt den nya regeringens budget ska underskottet minska från 6,1 procent av BNP förra året till 5,4 procent i år. 

Samtidigt är målet kvar om att nå 3 procents underskott till år 2029. Som ett första steg planeras utgiftsminskningar och skattehöjningar för 53 miljarder euro för i år. 

Budgeten ska nu behandlas i parlamentet

DI/Direkt 21 januari 2025

https://www.di.se/live/eu-ger-frankrike-gront-ljus-for-budgeten/

French Finance Minister Eric Lombard said he secured support from Brussels for his deficit-reduction path

Until it becomes law, the administration is reliant on emergency legislation to keep functioning with minimal spending.

https://www.bloomberg.com/news/articles/2025-01-21/french-finance-chief-affirms-deficit-path-after-wins-eu-backing

EU Sees France’s Fiscal Path as Compliant With Budget Rules

(The figure for public debt might appear shocking at first glance, especially when set against EU fiscal rules outlined in the 1997 Stability and Growth Pact, which stipulate that national debt should not surpass 60% of GDP.  

Budget deficit, meanwhile, should not surpass 3% according to the same guidelines.)

The European Union has told France its plan for slower deficit reduction next year is still within the bloc’s rules, handing Francois Bayrou ’s government a reprieve in its battle to repair creaking public finances.

France aims to bring the deficit within 3% of economic output by 2029

https://www.bloomberg.com/news/articles/2025-01-17/eu-sees-france-s-new-fiscal-path-as-compliant-with-bloc-rules

The ECB’s untested Transmission Protection Instrument (TPI) allows the governing council to buy distressed bonds on its own authority, but only for countries that pursue 

(a) “sound fiscal and macroeconomic policies”; (b) are not “subject to an excessive deficit procedure”; (c) do not have “severe macroeconomic imbalances”; (d) where the “trajectory of public debt is sustainable”; and (e) where stress is “not warranted by country-specific fundamentals”.

The two Germans on the ECB council know that any decision to bail out a French government in open revolt against EU budget rules would be challenged in the German constitutional court.

It would further crystallise a view in the German ordoliberal establishment that the euro project has gone off the rails. “The bar for ECB intervention is high,” said Davide Oneglia from TS Lombard.

“France has always been able to get away with it because it is France,” said Bernard Connolly, doyen of Wicksellian economists and author of You Always Hurt The One You Love: Central Banks and the Murder of Capitalism.

https://englundmacro.blogspot.com/2024/06/the-french-presidents-electoral-gamble.html

Tillbaka till Rolfs länktips 21 januari 2025

https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-21-januari-2025.html