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UPDATE 2-French finance minister says prospect of EU fines "not an issue"
November 20, 2014 / 7:43 PM / 3 years ago

UPDATE 2-French finance minister says prospect of EU fines "not an issue"

(Adds comments from Oettinger in Les Echos)

PARIS, Nov 20 (Reuters) - France’s finance minister has played down any risk that Paris might be fined for breaking EU budgetary rules just days before the European Commission rules on the government’s failure to cut its budget deficit.

Several EU officials have told Reuters that a fine was still an option.

“The question of fines is brought up every time there’s a meeting,” Michel Sapin said on Thursday, referring to the upcoming EU decision. “It’s part of the story-line some write for themselves. It is not an issue and has no substance.”

France’s EU partners had given its Socialist government two years in 2013 to meet the target of cutting the deficit to 3 percent of GDP. But France said last month the deficit would only fall to 4.3 percent next year from 4.4 percent in 2014.

It nevertheless received a provisional green light on its plan after offering to trim its deficit by another 3.6-3.7 billion euros ($4.5-4.6 billion), but the EU executive warned that it would look at the bill in more detail before making a final decision.

“If the disciplinary procedure has to be stepped up because of no effective action on the part of France, it would mean a fine, according to the rules,” one senior EU official with direct knowledge of the talks told Reuters.

Writing in Les Echos business daily, the EU’s new digital commissioner, Guenther Oettinger, said the Commission should insist France undertake “concrete and quantifiable measures coupled with precise deadlines” as a condition for a fresh deficit extension.

“France must commit to clear political goals that will resolve its economic and budgetary problems in a lasting way,” said Oettinger, a senior figure in German Chancellor Angela Merkel’s Christian Democratic Union party.

Without setting conditions, the EU would “lose all credibility”, he said, noting that such conditions should not be seen as a move against France, but as “a measure taken for and with France”.

Referring to the fact part of France’s additional deficit-cutting efforts will be financed by a smaller-than-expected contribution to the EU budget - while Britain must pay more - Sapin said of British premier David Cameron: “It so happens that what is infuriating Mr. Cameron on one side, is a comfort to us on the other side.” (Reporting by Ingrid Melander; Editing by Louise Ireland)

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