Bundesbank Calls France Out for High Deficit

Germany’s central bank has called on France to stick to its EU-mandated budget deficit target, saying that any slippage by such a euro zone heavyweight would further undermine confidence in the bloc’s fiscal discipline.

Last week France asked Brussels to give it an extra year to bring the deficit down to 3 per cent of gross domestic product, as EU projections showed the country’s deepening recession would put the measure at 3.7 per cent of GDP this year.

After hints from Olli Rehn, the EU’s economic chief, that he was willing to give France more time, Jens Weidmann, president of Germany’s Bundesbank, entered the debate on Monday in a speech in Paris, urging the French government to stick to its commitments.

“We are faced with a crisis of confidence,” Mr Weidmann told an audience at the Ecole des Hautes Etudes Commerciales, the business school where Francois Hollande, French president, studied.

“There has been a partial loss of confidence in our fiscal rules as well as in the will of European countries to consolidate their public finances.” It was therefore “particularly important for the heavyweights in [the euro zone] to give clear signals, which boost the credibility of the fiscal rules and agreements,” he said.

via CNBC

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