France angles for new EU timetable on budget limits

France angles for new EU timetable on budget limits
France's New Finance Minister Michel Sapin.

PARIS - France's newly reshuffled government took a combative tone with Brussels on Thursday, with new Finance Minister Michel Sapin saying the "pace" of deficit reduction would be raised in talks with the EU.

In his first public comments since being named on Wednesday, Sapin said he would work with the European Commission to "find the path to common interests" as the EU pushes France to reduce its deficit.

"Europe will be in better shape when France is in better shape," Sapin said. "We must together share the only important concern: more growth for more jobs, while gradually rebalancing our public finances."

His remarks were in contrast to a warning by the Eurogroup of eurozone finance ministers on Tuesday that France must respect its promises to meet an already delayed EU deadline for budget limits.

Sapin said that France would not abandon efforts to reduce the deficit but provided no timeline.

"The goals are goals that we will meet," he said several times.

France has promised to reduce its public deficit from 4.3 per cent of national output last year to 3.0 per cent next year under the EU's Stability Pact.

But with the economy stagnant and joblessness rising, President Francois Hollande's government is struggling to impose the spending cuts or tax increases needed to rein in the deficit, although it now says it wants to cut some taxes.

The government is deeply unpopular and reeling from a dismal showing in local elections on Sunday that prompted the reshuffle under new Prime Minister Manuel Valls.

In his first major interview since taking up the post, Valls said late on Wednesday that France has "no choice" but to tackle the deficit.

"It's a question of France's credibility, we must get our debt under control or we will lose our national sovereignty," Valls told TF1 television.

Hollande on Monday indicated France is looking to boost growth, and to ease the burden of deficit reduction - drawing a rebuke from eurozone officials.

France intends to make 50 billion euros ($69 billion) in budget savings over the next three years, decreasing spending and boosting competitiveness by reducing corporate and income taxes.

The new cabinet named on Wednesday streamlined the government, with a reduced line-up of 16 ministers from 38 under former prime minister Jean-Marc Ayrault.

Most senior ministers kept their posts but finance minister Pierre Moscovici was ousted in favour of Sapin and left-wing firebrand Arnaud Montebourg, who added the economy to his industry portfolio.

The government was already suffering teething problems on Thursday, with confusion over who would be responsible for external trade.

Both the economy and foreign ministries have claimed they will handle the portfolio and both Sapin and new government spokesman Stephane Le Foll were unable to give any clarity.

"I don't want to comment on all of this," Le Foll told Europe 1 radio when asked about the confusion. "The only thing I know is that external trade is a serious issue."

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