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Euro Area stability/Greece – French economy

Euro Area stability/Greece – French economy

Published on May 7, 2010
Interview given by François Fillon, Prime Minister, to “TF1” (excerpts)

Paris, May 5, 2010


Q. – So you’re confident in the Euro Area’s stability, that’s clear. But do you think there’s a risk of this financial crisis affecting, impacting on France?

THE PRIME MINISTER – Today in Europe, the French economy is, with Germany’s, the economy other countries have greatest confidence in.

We obviously have to do our utmost to keep it that way. First of all for us, for our own growth, but also because it’s one of the pillars of this European stability, which is our bulwark against speculation. When you look at what’s happening in Greece, when you look at the threats hanging over other countries in Europe, you clearly see that what’s important in order to keep other countries’ confidence in our economy is to carry out reforms, reduce deficits, not fail to take action, in the face of a world in the process of changing, and this is what we are going to do. Tomorrow I’m convening a meeting of the whole government to prepare the 2011 and 2012 budgets, and we’re going to take some decisions which will be tough ones.

Q. – Drastic measures? You’re talking about government debt, it’s huge in France. Are you going to take concrete measures to reduce it?

THE PRIME MINISTER – Our country’s debt has increased with the crisis, because to prevent the crisis completely stifling the French economy, we considered it necessary to invest and support consumption. Now it has to be reduced. We’re going to take some tough measures.

Q. – Which ones?

THE PRIME MINISTER – We’re going to reduce public spending. And when I talk about public spending, it includes State spending, local authority spending and welfare spending. This public spending must fall in relation to the Gross Domestic Product, to national wealth. In two years we’re going to save five billion on the niches fiscales [tax breaks or shelters]. It’s an imperative objective which I will set the members of the government tomorrow.

Q. – That will make it possible to cut the €1,500 billion…

THE PRIME MINISTER – It makes it possible to reduce the deficit and as we have the best growth forecasts in the whole Euro Area, for 2010 and 2011, it means that with the growth we’re going progressively to reduce our indebtedness. But for the moment what we need to do is reduce the deficit. Bring us closer to meeting the criteria of the European Stability Pact which has to be respected. We see with the Greek situation what happens when it isn’t. We’re going to do this, asking everyone to make some efforts, because they have to be made. But we won’t, at the same time, be implementing what’s described as an austerity plan, because we’re continuing to invest in areas which are essential for the growth of the French economy. This week I have released the first 7 billion of the “big loan” to invest in strategic sectors of the French economy, which will create tomorrow’s jobs.

Q. – So, no austerity plan but a reduction in the public deficits.

THE PRIME MINISTER – We have cut spending. We are in a country where public spending has gone too high. Today I think that what’s happening in the rest of the world shows that when you carry out the reforms in time… This is where over the past three years President Sarkozy has been strong, setting in train some very significant reforms, which our fellow citizens at times find a bit unsettling. It’s thanks to this reform effort that France and Germany are today at the same level, as regards the confidence other countries and the markets have in their economies.

Q. – Precisely, can this financial instability affect the pension reform you are in the process of conducting?

THE PRIME MINISTER – What’s certain is that no country can let its pension funding drift out of control. Because that’s immoral, it would mean ruining the future for future generations. (…)./.

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