French Budget Disregards EU Fiscal Guidelines

France submits its annual budget to Brussels on Wednesday, disregarding calls from EU officials to introduce more cuts.

With left-wing MPs deeply unhappy over austerity, President Francois Hollande’s government looks set not only for a rebuttal from the EU but for a rebellion in the National Assembly in Paris as well.

Whatever hopes the officials in Brussels had of softening the French stance, these have been dashed.

No, France will not review its annual budget for 2015.

“The European Commission doesn’t have the power to ‘reject’ or ‘censure’ the budget,” Finance Minister Michel Sapin said earlier this week. “Here, sovereignty belongs to the parliament.”

Under EU rules, the Commission has the power to oversee a member state’s budget and can take legal action, recommending changes and targets if it does not stick to fiscal discipline.

But Mr Sapin’s defiant words echoed those of Prime Minister Manuel Valls, who said France was “a big country that should be respected”. In other words, nothing will persuade France to change its plans.

Earlier this month France put forward an annual budget that included 21bn euros (£17bn; $27bn) of cuts – but admitted it would miss its EU deficit target of 3% of GDP for the third time.

via BBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza