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France tells EU to be flexible on budgetary rigour to protect growth

French President François Hollande
French President François Hollande Reuters/Laurent Capmas

French President Francois Hollande on Wednesday urged the European Union to relax its rules on budget discipline to protect faltering growth in the eurozone.

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"We have to adjust budgetary policy with respect to the challenge of growth," Hollande said on his arrival in Milan for a brief informal summit with other EU leaders.

The French leader said the issue would be discussed at a full European Council later this month with German Chancellor Angela Merkel.

However Merkel has made it clear she will not countenance any easing of the requirement for EU governments to reduce budget deficits to below three percent of GDP and maintain them there.

Last week, France announced that it would fail to meet that target until 2017 and ruled out any further spending cuts, in contravention of the agreed rules for the single currency, on the grounds that further cutbacks would only slow the economy further.

That message was reinforced by Hollande. "If everyone imposes austerity, which is not the case of France, there will be an even greater slowdown of growth," he said.

The European Commission is currently considering whether to use new powers it acquired last year to force France to rewrite its controversial budget.

Such a move would create huge waves in France.
 

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