French debt matter of ‘protecting sovereignty’

PARIS - Agence France-Presse

The head of the European Central Bank Mario Draghi speaks in Brussels. EPA photo

Reducing France’s debt is not a question of austerity, but of guaranteeing the country’s sovereignty, President François Hollande said yesterday, as European Union finance ministers prepared for a crucial meeting on Spanish banks.

“This is not a choice for an assault of austerity, but the choice for the future sovereignty of our country,” Hollande said during the opening of a two-day “social conference” bringing together the French union and employers’ groups.

Hollande called for France to “make our social model evolve to better guarantee” the country’s financial security, amid calls from business groups for greater labor market freedom and concerns over France’s high trade deficit and low competitiveness.

“The moment has come to put France in motion, there is no time to lose,” Hollande told about 300 people gathered for the conference.

“France has not developed a culture of negotiation,” Hollande said. According to him, France, a country famed for labor strikes, needs to “make our social model evolve to better guarantee” the country’s financial security, adding that controlling public finances and reducing the debt were a question of France’s “future sovereignty.”

Meanwhile, the European Commission was set to give Spain an extra year until 2014 to meet an agreed EU public deficit target, a EU official said yesterday. Spain is to cut its deficit to the EU limit of 3 percent of GDP in 2013, but a delay of one year “is on the table [and] is expected to be approved [today]” by the EU’s 27 finance ministers, the official said.

Although no final decision was expected at a Eurogroup meeting of eurozone finance ministers yesterday for a bailout of Spain’s banks, a wider gathering of EU finance chiefs today was set to ease a debt goal that has pressured Madrid to make punishing cuts that are exacerbating a recession.