BRUSSELS — The European Union’s executive arm on Wednesday criticized France for accumulating excessive debt, a harsh rebuke at the height of a election campaign where President Emmanuel Macron faces a strong challenge from the far right and the left.
The EU Commission recommended seven countries, including France, start the so-called “excessive deficit procedure”, the first step in a long process before any member state can be hemmed in and forced to take corrective measures.
“The deficit criteria are not met in seven of our member states,” said European Commission Vice President Valdis Dombrovskis, pointing to Belgium, Italy, Hungary, Malta, Slovakia and Poland, as well as France.
For decades, the EU has set targets for member states to keep their annual deficit within 3% of gross domestic product and overall debt within 60% of output. Those goals have been ignored when convenient, sometimes even by countries like Germany and France, the bloc’s largest economies.
This time, however, Dombrovskis said a decision “must be made based, for example, on the facts and whether the country respects the treaty, on the reference values for the deficit and debt, and not based on the size of the country”.
The French annual deficit stood at 5.5% last year.
In recent years, exceptional circumstances such as the COVID-19 crisis and the war in Ukraine allowed for leniency, but that has now come to an end.
Still, Wednesday’s announcement struck a chord in France, after Macron called early elections following his defeat to far-right Marine Le Pen in the EU parliamentary elections on June 9.
Le Pen’s National Rally and a new left-wing united front are leading Macron’s party in the election, and both rivals have presented plans in which deficit spending to break economic stagnation is essential.
In the election campaign, Macron’s camp could use the slap on the wrist as a warning that extremes will lead France to ruin, while the opposition could claim that Macron had spent too much and even impoverished the French, leaving them with no choice. option than spending even more.
Despite the rebuke for excessive debt, EU Economy Commissioner Paolo Gentiloni stressed that France was also moving in the right direction to address certain “imbalances”, sending a “message of reassurance” to the institutions of The EU.
The International Monetary Fund forecasts that the French economy will grow at a relatively slow pace of 0.8% of GDP in 2024, before rising to 1.3% in 2025.
And unlike the measures imposed on Greece during its dramatic fiscal crisis A decade ago, he said excessive austerity was not an answer for the future.
“It by no means means returning to austerity, because it would be a terrible mistake,” he said.
He also disputed the claim that it was austerity itself that prompted voters to shift to the far right, pointing out that lenient budget conditions had been in place for the past few years and still allowed the hard right to emerge victorious in many member states.
“Look what happened in the recent elections. If the theory is ‘less spending, stronger ends,’ well, we’re not coming from a period of less spending,” Gentiloni said.
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John Leicester contributed from Paris
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