President François Hollande has issued an unusually stark warning to France to expect painful reforms as Paris comes under mounting pressure from Berlin and Brussels to adopt robust measures to revive the flagging economy, reports The Financial Times.
Chancellor Angela Merkel has publicly praised Mr Hollande’s reform programme but privately German officials have told their French counterparts that Paris is doing too little to pursue structural reforms and Berlin will resist any French plea for leniency when Brussels issues its verdict on French economic plans next month.
On the eve of the publication of his socialist government’s 2015 budget, set to include €21bn in public spending cuts, Mr Hollande said: “The savings are inevitably painful. We have to make savings. What we will do in 2015 will necessarily have consequences.”
His remarks marked a distinct change of tone for a government that has insisted to date it was avoiding austerity. They followed a pre-budget announcement that social welfare spending will be cut by €9.5bn next year, including slashing the €900 one-off childbirth payment by two-thirds from the second child onward – a cherished element in France’s generous family benefits system. The move prompted howls of protest across the political spectrum.
The protests underscored the acute difficulty facing Mr Hollande as he seeks to reconcile hostility to change at home with frustration among his European partners over France’s wayward public finances and slow embrace of market reforms.
“I have never known Berlin more annoyed with France,” says Charles Grant, director of the Centre for European Reform, a think-tank. “Seen from Berlin, Hollande has wasted two years achieving virtually no structural reform and failing to rein in spending.”
Read more of this report from The Financial Times.