|France warns against euro zone austerity diet
France has called on fellow European nations to ease off on painful austerity policies to give the economy some breathing space and avoid social upheaval.
Continuing a strict course of spending cuts and tax increases would only “nourish a social crisis that leads to populism,'' French Finance Minister Pierre Moscovici warned today, AP reports.
“There is no alternative to starting a path that will lead to a return of growth,'' he added, speaking at a conference of the European Parliament's group of center-left parties in Brussels.
Moscovici stressed Italy's election result “was a message’’ that insisting on the current pace of budget cuts and structural reforms without a credible growth strategy is not sustainable and will ultimately backfire.
He reiterated his demand that the euro zone should have its own budget to finance initiatives favoring job creation and growth. Germany, which together with France makes up almost half of the bloc's economic output, has signaled it is open to that idea, but Chancellor Angela Merkel has floated a maximum ceiling of about (euro) 15 billion _ a small sum compared to the bloc's annual GDP of (euro) 10 trillion.
Moscovici provided few other details on what growth-friendly initiatives or policies he wants Europe to pursue, but vowed that France will push for a substantial debate on the matter at next week's summit of the European Union's 27 leaders.
“It has to be done in a way that people, citizens can recognize the reform process, can support it finally and can see some hope, some light at the end of the tunnel, which is not the case today,'' said the European Parliament's center-left caucus leader, Hannes Swoboda.
He warned that continuing the harsh enforcement of European debt rules will not only worsen the recession, but eventually threaten Europe as a whole.
“More and more citizens today identify Europe with austerity, unemployment and perhaps even authoritarian dominance from outside,'' Swoboda said.
New data showed unemployment rate in France is still rising. It was up to 10.6 percent in the fourth quarter of 2012 from 10.3 percent in the previous three-month period, according to France's statistics agency.