France seek Europe political union within two years

FRANCE’S socialist leader François Hollande has called for an “economic government” in the eurozone with its own budget, right to issue debt, harmonised tax system and full-time president.

President François Holland: '[It would] create an economic government'. Picture: Getty

Speaking to mark his first year in office yesterday, a day after economic data showed his country had slipped back into recession, the French president said he sought to create a full political European Union within two years.

“If Europe doesn’t move it falls over, or rather, it disappears from the map of the world,” he said. “My duty is to bring Europe out of its lethargy.”

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His proposals seemed likely to encounter stiff resistance from Germany, Europe’s leading power, which opposes mutualising debt among European states, as it would bear the lion’s share, and is reluctant to give the eurozone its own secretariat or create new divisions in the EU, of which ten countries remain outside the 17-nation single ­currency.

Mr Hollande’s party last month called German chancellor Angela Merkel’s leadership in the eurozone crisis “self-centred” in a text – later amended – which revealed the depth of hostility in France provoked by her drive for fiscal austerity.

“My initiative has four points that I am putting to our partners. The first is to create an economic government with the eurozone countries which would meet every month with a real president appointed for a long period and who would be devoted to this task,” Mr Hollande said.

“This economic government will debate the main political and economic decisions to be taken by the member states, harmonise tax policy, start the convergence of social policies from the top and launch a battle against tax fraud.”

Mr Hollande said it was a “good signal” that the European Commission had “started to understand the risks and threats” of austerity. He also urged the EU to bring forward planned spending to combat youth unemployment, which has reached record levels in Greece and Spain, just ahead of the UK in the EU league.

Mr Hollande, whose approval rating has fallen further than any previous elected president in his first year, sought to reassure his left-wing electorate that he 
remained true to his socialist principles, saying France could keep its generous welfare state provided it was made more efficient. He expressed full confidence in premier Jean-Marc Ayrault and played down criticism of clashes among ministers on economic policy. He dismissed talk of a reshuffle in the short term.

But he said the current pension system was unsustainable and, ahead of a reform due later this year, said the French would have to work longer in future for a full pension.

He stuck to a promise to reverse the rising trend in unemployment by the end of the year, despite widespread scepticism among economists that this can be achieved while the French economy remains flat.

He also called for a ten-year public investment plan in the digital sector, the promised energy transition, public health and in big transport infrastructure projects.

Mr Hollande said it was paradoxical Europe, which remained the world’s leading economic power, was regarded “as a sick, declining, doubting continent.

“It is my responsibility as the leader of a founder member of the EU … to pull Europe out of this torpor which has gripped it, and to reduce people’s disenchantment with it.”

He defended his first year in office, saying the government had laid the groundwork for reining in public finances and restarting growth.

He also paid homage to French soldiers serving in Mali, where troops were sent earlier this year to oust Islamist rebels who had seized control of the north. He said the intervention had “made France loved in all of Africa” and highlighted “the role of a great nation that has the power to have its influence felt in the world.”