12 May 2013

Dijsselbloem: France must speed up reforms

Jeroen Dijsselbloem, the president of the 17-nation euro bloc of nations, said France needs to accelerate its reform programme after the country was given a two-year extension to meet EU budget-deficit targets.

"France has to push forward its programme. They've now been given two more years to reach their deficit goals. Part of the deal should be they push forward their reforms, and I'm sure that the French government is committed to those reforms", Dijsselbloem said. Hollande's Socialist government has been accused of being slow to pursue structural and labour reforms while aiming to raise taxes on the rich via a new wealth tax.

Dijsselbloem warned that monetary expansion can't go on forever and European countries need to prioritise structural reforms and fiscal consolidation. "Monetary policy can really not help us out of the crisis. It can take away the pressure, it can accommodate new growth", Dijsselbloem said. "But what we really need in all countries is structural reforms in the first place. I'd just like to stress the point that in the policy mix of fiscal policy, monetary policy and structural reforms — I'd like the order to be exactly the other way around. Structural reforms in the first place, fiscal policy and viable targets in the mid-term for all regions in second place — and monetary policy can only accommodate domestic economic problems in the short term."

Dijsselbloem said he was confident the eurozone will make progress on a banking union and put in place a process for bailing in banks before the summer, though a decision may not be made at the next Eurogroup meeting. The need to establish a clear process for rescuing troubled banks became apparent after policy-makers intervened to rescue Cyprus' banking industry in March, enforcing losses on bank depositors for the first time in the four-year-old eurozone debt crisis.

Full article

© CNBC LLC