EU should prioritise growth not state of public finances - Sapin

The EU must move on from its immediate preoccupation on the crisis in public finances to prioritise growth, France's minister for finance, Michel Sapin, will tell his counterpart Michael Noonan at their meeting in Dublin on Friday.

Mr Sapin, who praised Ireland's abolition of the double Irish tax system as "heading in the right direction", told The Irish Times that France would shortly be proposing to the Council of Finance Ministers rapid action on measures to curb tax evasion. He said that thee erosion of the tax base by virtual companies had to be ended.

The minister, who is on a extended tour of capitals to promote France’s insistence on a turn to growth and jobs promotion, will also lobby for support for his country’s interpretation of thee EU’s deficit reduction rules which France will not meet. Its deficit will this year hit 4.4 per cent of GDP and next year only 4.3 per cent because of the effect of cuts of €12 billion in taxes on employment seen as necessary to aid employment.

Mr Sapin insists that France should meet the EU target of 3 per cent belatedly by 2017 but said what is at issue is not the destination but the “rhythm” of approach “particularly in a period of slow growth”.

He said that 7 out of 18 euro zone countries, “representing significantly in excess of half the euro zone’s GDP”, faced similar deficit challenges.

The EU must not “become obsessed” with budget issues , he warned, arguing that the current rules “provide for flexibility” .

He rejected the suggestion that France would be perceived by markets as a riskier proposition if it allowed its deficit reduction to slip - that was simply not the reality of the markets which see France as having great potential, he said.

Expressing confidence in the strength of the Franco-German relationship, Mr Sapin said that he hoped next week’s meeting of the two countries’ economic council would see Berlin express a clear commitment to programme of new investment. There have been repeated calls from other member states and international institutions for Germany to assist the recovery of the EU economy by stimulating demand.