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Brussels budget warning brings Macron down to earth

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France’s newly-elected president Emmanuel Macron has already pledged to turn around his country’s choking public finances, but new figures from the European Commission show how this will be a Herculean task, reported I News.

The Commission’s spring economic forecasts, published Thursday, reveal that France’s deficit will be 3 percent of GDP this year, higher than the 2.9 percent previously predicted. The deficit will rise to 3.2 percent in 2018, up from the previous forecast of 3.1 percent, with both figures breaching the 3 percent threshold set under EU excessive deficit rules.

The Commission said that France’s overall gross debt will continue to rise, from 96.0 percent last year to 96.4 percent this year and 97.7 percent in 2018. The good news for Mr Macron, however, is that growth will also continue to rise, from 1.2 percent last year to 1.4 percent in 2017, and 1.7 percent in 2018. Likewise, unemployment will fall from 10.1 percent last year to 9.9 percent in 2017, and 9.6 percent in 2018.

EU economics commissioner Pierre Moscovici said he was hopeful that Mr Macron’s administration would be able to hit the 3 percent target. “The 3 per cent is within reach,” said Mr Moscovici, who is a former French finance minister. “I really hope France seizes this opportunity.” He added that the forecasts do not take into account Mr Macron’s economic policies, which include slashing some €60 billion in public spending over the next five years and reducing the ranks in the civil service by 120,000.

While Mr Macron’s win in last Sunday’s election was heartily welcomed by EU figures in Brussels, they have also pushed him to address France’s chronic budgetary imbalances. Commission President Jean-Claude Juncker on Monday that “the French spend too much money and spend it on the wrong things.”

Across the whole eurozone and the wider EU, however, the Commission said the state of the public finances is improving. The euro area deficit will fall from 1.5% of GDP last year to 1.4% in 2017 and 1.3% in the year after, compared to 1.6% and 1.5% respectively for the EU, down from 1.7% in 2016. And while the Commission revised upward its forecast of the UK’s growth upwards to 1.8 percent this year, from a previously estimated 1.5 percent, the figure will fall to 1.3 percent in 2018 as Brexit starts to bite.

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European Commission vice president Jyrki Katainen Monday warned against French President-elect Emmanuel Macron’s proposal for a “Buy European Act,” which he said would distort the EU market, reported Politico.

“Buy European” is a key plank of Macron’s economic policy, which would restrict access to public procurement contracts in the EU — like rail and infrastructure projects — to those companies that have at least half of their production inside the bloc.

“I strongly believe that Europeans are capable of providing services and goods that fulfill the expectations of European consumers without any artificial rules, which would force people or local authorities to only buy European [products] without a reason,” the Finnish Commissioner told reporters in Brussels.

He added that “the EU as a whole cannot afford to restrict public procurement,” and pushed instead for a “global public procurement system,” although he recognized that this was difficult to achieve.
Katainen was generally positive about the effect that Macron would have on EU trade policy.

“When I listen to what Emmanuel Macron said during the campaign, he seemed to have been a very active shaper of globalization instead of building walls around France, so I expect that France will be a strong influencer” in advancing the EU’s trade policy and benefiting from globalization, Katainen said, adding that his election was “good” for Europe.

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