French Finance Minister Pierre Moscovici pressed the euro area to focus more on policies for promoting economic growth following three years of fiscal austerity to tackle the Greece-triggered debt crisis.
“Budget adjustment and growth — we need to pursue a fair balance between these two objectives,” Moscovici told a conference of the European Parliament’s Socialist group today in Brussels. “We face a collective economic situation that is painful.”
The comments are the latest salvo against a German- fashioned European policy fiscal tightening for tackling a crisis that has led to 486 billion euros ($633 billion) in international commitments to rescue Greece, Ireland, Portugal and Spain’s banking system. The taxpayer-funded bill is due to rise as Cyprus nears agreement on the euro area’s fifth bailout.
The eurozone economy will shrink 0.3 percent in 2013, marking the first back-to-back annual contraction since the single currency’s birth in 1999, the European Commission forecast last month. The overall outlook for this year masks a split between growth in northern nations like Germany, Finland and Belgium and dwindling output in southern countries such as Italy, Spain and Greece.
France is straddling the middle, set as to eke out a 0.1 percent expansion in 2013 after the economy stagnated last year, according to the commission. European Economic and Monetary Affairs Commissioner Olli Rehn, who enforces budget-discipline rules for euro nations, three days ago signaled a readiness to be more flexible in requiring fiscal cuts.
In his comments today, Moscovici praised the commission’s approach, calling it “balanced” and “intelligent.” [Bloomberg]