French president François Hollande has put himself firmly at odds with Germany and Britain on the eve of a key EU summit, reiterating his opposition to steep cuts in the bloc’s budget and criticising London for seeking to dictate policy.
With EU leaders due to meet in Brussels this week for a second attempt to agree a new seven-year budget, German chancellor Angela Merkel will travel to Paris today hoping to bridge a wide gap between between the largest players.
The UK, backed by Germany and the Netherlands, is pushing for a spending freeze, while most other EU members want either to maintain or increase the proposed budget. France argues that severe cuts would hamper economic growth, and has resisted further reductions in the Common Agricultural Policy, which is cherished by its large farming sector.
Speaking at the European Parliament in Strasbourg, Mr Hollande said the negotiations were “very difficult” but could yet succeed. “A compromise is possible, but it must be reasonable. Make savings, yes, but weaken the economy, no.”
Referring to London’s stance, he added: “Why should one country decide for 26 others?”
Mr Hollande also criticised Britain for clinging on to its rebate, which is worth about €3.5 billion a year. “There are those who want to see cuts,” he said, “[and] others – possibly the same – who want guarantees on their own rebate.”
Apparently alluding to British prime minister David Cameron’s recent pledge to renegotiate his country’s EU membership, Mr Hollande said there could be no “a la carte” attitude to the EU and warned national interests were “overtaking” the interests of the EU.
Strengthening euro
Amid French concerns that the strengthening euro could hurt exports and hamper economic recovery, Mr Hollande also risked German ire by urging the euro zone to act on the issue. “A monetary zone must have an exchange rate policy or else it ends up subjected to an exchange rate that does not match the true state of its economy,” he said, adding that the euro should not be allowed to “fluctuate depending on the markets’ mood”.
Germany has set itself against intervention in currency markets, with its economy minister, Philipp Rösler, saying just hours before Mr Hollande’s speech that the objective must be “to improve competitiveness and not to weaken the currency”.
Mr Hollande also put pressure directly on Berlin when he said strong euro zone states must act to increase demand – a common French theme.
Campaign themes
The speech was Mr Hollande’s most wide-ranging attempt to set out his European policy since coming to power last May.
Taking up his campaign themes of growth and jobs, he said that while the euro zone crisis was “now largely behind us”, the threat today was “no longer the mistrust of the markets but that of the people”.
“I don’t want to condemn Europe to an austerity policy without end,” he said. “Debt reduction and competitiveness are important, but this policy must be applied wisely.”
