French Socialists call for weaker euro, eased EU budget rules

Scofflaw

France's ruling Socialists called on Sunday for a weaker euro and changes to EU rules on budget deficits, accusing the centerright governments of Britain and Germany of creating economic hardship across the European Union.

At a conference on Europe, Francois Hollande's party adopted a policy paper that toned down earlier attacks on German Chancellor Angela Merkel, providing some relief to the French president as he seeks to ease tensions with Berlin.


"Right-wingers have ruined Europe and thrown Europeans into precariousness," read the preamble to the 13-page policy paper which seeks to woo voters ahead of European Parliament elections in early 2014 where Eurosceptic and far-left and far-right parties are expected to make gains.

"The ambition of the (European) community has been destroyed by an alliance of convenience between British conservatives who only want a Europe on the cheap and a la carte, and the free-market intransigence of the German right," it concluded.

http://www.reuters.com/article/2013/06/16/us-eu-france-socialists-idUSBRE95F0CU20130616

This is, apparently, a toned-down version of what the French Socialist Party originally wanted to say.

The text also called for a re-opening of EU austerity plans agreed for Greece, Portugal and Spain; the issue of Eurobonds; coordinated steps to allow a devaluation of the euro, notably against the Chinese and Japanese currencies; an easing of EU state aid rules; and increased funding for the EU.

The paper, while expressing the view of Hollande's party, will not necessarily translate into official government policy. But it will keep pressure on Hollande not to push too far ahead with budgetary rigor.

It will be interesting to see how much of this party feeling does translate into action, if any.

cordially,
Scofflaw

KyussBishop

Good to see a relatively strong nation like France speaking out more, hopefully it's backed more by other countries (though Germany will still have an effective veto I imagine); there is so little being said, on such critically important issues (which is criminal really - almost all EU governments are completely failing in their responsibility to speak out), that I've not been hopeful of anything being done.

Eurbonds will certainly be vital to the future (if any) of the Euro; it's worth noting as well, that if devaluation is expressly desired, that blows away one of the primary concerns people express, of using money creation for funding (however politically impossible that is at the moment); though that isn't really a concern anyway, so long as the money goes into increasing economic activity, and increased imports are just a 'balance of trade' issue that is easily corrected over the long term.

Count Dooku

If Germany will leave Euro, then Euro will weaken itself, without calls from French populists
Effectively French Socialists are asking Germany to pay for their populism and absence of budget discipline

Nody

France signed up to the same rules as everyone else and now that they actually have to deliver to what they agreed they go whining about it because they made impossible campaign promises (lower retirement age, more teachers etc.). This is a clear example of why euro bonds should never be implemented; when a major country can't stick to even the most basic agreements why would you trust euro bonds to work?

KyussBishop

The EU agreements in place right now, are those of a mutual agreement to economically self-destruct; not calling for a renegotiation and changing of those agreements, would be criminally negligent at best.

Count Dooku

Count Dooku wrote: »

If Germany will leave Euro, then Euro will weaken itself, without calls from French populists
Effectively French Socialists are asking Germany to pay for their populism and absence of budget discipline

I would almost agree, but at this stage with the US and Japan having committed to massive quantitative easing, it's hard to see why Europe has shown little sign of anything as unconventional. There surely comes a point when economic stimulus becomes beneficial, or would you imagine we're just to accept high unemployment and low economic growth going into the distant future?

[Jackass]

It would suit Ireland if they got their way, that's for sure.

Regardless of the politics of it, it is a sensible plan to expand eurozone growth imo and a stronger performing eurozone is only a good thing for everyone involved. Sooner or later we're going to have to change course entirely. Our forwarded planning is too individualistic and not communal enough, and that has been the single most destructive obstacle of the last few years.

Pete_Cavan

The French Socialists are just trying to appease Unions and are blaming their lack of competitiveness on everyone else. They have been becoming increasingly uncompetitive for more than 10 years now and they dont want to tackle the problem. And its not just low cost economies in Asia that are their problem, the place where the trade balance of France has deteriorated the most is within Europe. Other economies have moderised while the French remain stagnant due to the heavily entrenched Socialist views in the country.

Look at the recent Air Traffic Control strikes, the French Unions involved oppose a change which would reduce the cost of air travel within Europe, and damage their own economy (and economies of others) in the process, in order to protect themselves. Protecting themselves isnt really a problem until you get left behind. So while the French strikes delay the Single European Sky, the US push ahead with their NextGen programs and the Seamless Asian Sky advances to reduce costs in these regions. Competitiveness is not something that worries the French, they think everyone else should change while they remain the same.

View

Nody wrote: »

This is a clear example of why euro bonds should never be implemented;

That depends on the purposes of the Eurobonds though doesn't it? And who would be spending and repaying the monies raised by selling them of course.

If the Eurobond is for a common EU purpose - let's say research with a mutual benefit to a successful programme - then it should be something everyone could agree to do.

If it is just to allow some specific member state to continue spending recklessly then they would be foolish in the extreme.

That does require a judgment call though on "Reckless spending" as opposed to genuine emergency aid where the member state concerned is serious about tackling its financial problems.

hmmm

A weaker Euro, i.e. an inflation tax on anyone with savings or who has limited ability to increase their wages (e.g. pensioners, private sector workers). Typical easy answers from the left.

Rightwing

Rojomcdojo wrote: »

I would almost agree, but at this stage with the US and Japan having committed to massive quantitative easing, it's hard to see why Europe has shown little sign of anything as unconventional. There surely comes a point when economic stimulus becomes beneficial, or would you imagine we're just to accept high unemployment and low economic growth going into the distant future?

These 2 countries are going to face severe financial turbulence in the not too distant future. Japan is already being rocked, to the extent that one wonders has the BoJ already lost control. Mad Ben Bernanke is trying to reign in their QE as he sees the turmoil in Japan.

Laughable to think that these buffoons think you can solve recessions/depressions simply by printing money.
They should just ask another financial genius how that panned out: Mugabe. The man was ahead of his time.

SeanW

Rightwing wrote: »

They should just ask another financial genius how that panned out: Mugabe. The man was ahead of his time.

Or the good burghers of Weimar Germany. Look how well THAT turned out :rolleyes:

realitykeeper

A weaker euro will lead to higher inflation because imports from outside the euro zone will cost more. I think what Europe really needs to do is to regain its competitiveness against the rest of the world. To become more competitive, one must cut ones costs and to do that one must become more austere.

rumour

OP Because they are as broke as everyone else and have nowhere to go. Curiously they have low income tax but tax the hell out of companies. So much so that it's killing them. The leading french firms which the government rely on for revenue have been busy relocating in the last decade because 'La France' is to expensive to employee people in a competitive world. The socialist government are snookered; they can't demand more money from 'les grands entreprise' because they are already overtly expensive in France compared to any other western world country ( never mind elsewhere) and the other option is to cut back services or increase tax. Neither are politically palatable to the french. The only option is to go on the offensive and claim everyone else is not paying enough tax(Sarkozy started this a while ago, but as evidenced in the recent G8 summit they are all on board with the idea that we need more money from somewhere) coupled with the all to familiar political solution of lets devalue which is so much easier than addressing living within your means.
Anyone who thinks we should look up to France for direction is seriously deluded, they are in as much crap as Ireland, their saving grace is they got to foist some of their banking crap on the Irish tax payer, with a little help from the ECB and Lisbon 2 which secured French and German dominance of Euro area affairs. If you're in doubt about this check out the leading banks in the world from 2007 to 2010 and explain why they are re-positioned currently. Pretty much the same carry on as Anglo.....as long as some else is pays and you get away with it.

GSF

And what will happen if every other nation engages in competitive devaluation of their currency too - we will be back to square one.

I think it's just the French desire to retire at 55 whilst having the Germans work til they are 70 to pay for it. This might have worked when the Germans still had a legacy WW2 guilt complex, but the next generation won't tolerate this nonsense.

macraignil

A lower value Euro has to be good for a country like Ireland that is so dependant on exports. If the european economy is trying to sell anything abroad a lower price will make the european product more competitive. Something needs to be done to improve the environment for business to create new products and services and employment throughout the EU. A successful single curency area can not just operate to suit the economy of its most industrialised member state. Reducing the value of the Euro could help reverse the highest unempoyment levels in the areas history. Unfortunately for Ireland this would be unpopuar in Germany where saving for lean times is part of the nations culture.