Luc Frieden: French deficit "way too high"
Luxembourg finance minister Luc Frieden today criticised Franco-German proposals to stabilise the euro zone, saying they were a step in the “right direction” but called for existing commitments to be met first.
Speaking to German Radio Deutschlandfunk Frieden said the proposals put forward by Nicolas Sarkozy and Angela Merkel in Paris on Tuesday provided “nothing new”, “I believe we would be better focusing our energies on the implementation of these commitments," he said.
Frieden said that the French deficit was already "way too high" to introduce a system of eurobonds and stressed France's “great need to catch up” with its high budget deficit and its “Constitution that does not include a debt ceiling threshold.”
In reaction to the Franco-German proposal to endow the eurozone with an economic government that would be presided by Herman Van Rompuy, Mr Frieden believed that “the Eurogroup is already doing relatively well today”.
“The most important to me and many other finance ministers is to apply what has already been decided,” so he continues by citing in particular the European stability pact that already fixes limits to cap debts and deficits, and the European reform agenda for 2020.
“Although I believe that Eurobonds are indeed a good idea, the context for introduction is not favourable since some believe that Eurobonds could be used to create unlimited debts,” asserted Mr Frieden at the Deutschlandfunk. “There was never a question of wanting to make it a blank check,” he claimed.
“Eurobonds would only make sense in a Europe with a single currency that would work perfectly.” For now at least, fiscal discipline must be restored, particularly in some southern European countries,” he added. The idea to issue bonds common to the euro zone that would allow states to mutually protect each other was rejected on Tuesday by Angela Merkel and Nicolas Sarkozy in particular because this solution would affect those states that are high ranked by financial rating agencies.