Stagnation Solution

France's European Union Nominee Urges More Spending

Moscovici reuters
Pierre Moscovici is convinced he has what it takes to be the European Union's new commissioner for economic and monetary affairs.
  • Why it matters

    Why it matters

    The former French minister is a candidate for European commissioner for economic and monetary affairs, a role some question given France’s economic woes.

  • Facts


    • The European Commission may announce its new commissioners next week.
    • Pierre Moscovici was French finance minister from 2012 to April 2014.
    • Mr. Moscovic is a confidante of French President Francois Hollande.
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Pierre Moscovici is a confident man. The former French finance minister is moving to Brussels shortly to become a member of the European Commission, the European Union’s executive arm. France is pushing for him to be given the economic and monetary affairs portfolio, despite German resistance. While the decisions will be taken this weekend, Mr. Moscovici said he believes Germany’s concerns over having a Frenchman at the helm of economic policy in Europe have been addressed. Promising to serve as a commissioner for Europe, not for France, he pledged that reviving growth and jobs in Europe will be his top priority. He sat down for an interview at the French embassy in Berlin.

Handelsblatt: Mr. Moscovici, how confident are you of becoming EU Commissioner for monetary affairs?

I am neither confident nor pessimistic. We have clear institutional rules. It is the task of incoming [Commission] President Jean-Claude Juncker to decide on the division of labor. What I can say is that, I have the necessary experience to do the job if it is offered to me. I have given my political life to Europe. And I stand for a balanced Europe that cares for budget consolidation and for growth and jobs.

Handelsblatt: The German federal government has its concerns about you. Is it right that a French candidate become monetary affairs commissioner, when the country has for years been running a higher deficit than the European Union’s “Stability Pact” allows?

Of course, commissioners have a nationality – I am French. They also belong to a party – I am a Social Democrat. But I will not be an ambassador either of country or party. I am becoming a member of the European Commission and will represent European interests. That means we should respect and uphold common rules. Also: France has never breached the Stability Pact. Nor do we want the rules to be changed.

Handelsblatt: But as finance minister you saw to it that France was given an additional two years to meet bring its budget deficit within the proper limit.

“We must get out of this stagnation trap. If not, our democracy will suffer.”

Pierre Moscovici, Former French Finance Minister

When I became finance minister in 2012, the deficit stood at 5.3 percent of gross domestic product. It was impossible to bring the deficit to below 3 percent in one year. If we had tried, it would have caused a devastating recession. I discussed this with the monetary affairs commissioner, Olli Rehn, at the time. We agreed to a two-year extension. This was not a breach of the rules, but only a reflection of special circumstances, which is granted. I convinced Olli Rehn that France is undertaking reforms and solving its problems. But it needs time.

Handelsblatt: How much patience does Europe still need to have with France?

In 1997 I became the youngest government minister in France. In 2002 I left the government. Throughout that time, the situation in France was better than that in Germany. It was said at the time that Germany is the “sick man of Europe.” Then [former German chancellor] Gerhard Schröder reformed the country with his Agenda 2010, and now Germany is the strongest economy in Europe. France only launched its reforms two years ago. Of course they will take time to bear fruit. But the right course has been set. And the commitment of the French government is there.

Handelsblatt: If you were to become commissioner, will France get another extension?

That would be a joint decision of the Commission and the [European] Council. The rules cannot be broken. But in any case, this is pure speculation at this point.

Handelsblatt: Do you seriously believe France can meet the 3-percent deficit limit this year?

I am not in possession of the figures that could answer this question. But to be clear: as economic and monetary affairs commissioner I would of course respect the common rules. This is a question of credibility for the Commission and also for me personally.

“Without growth, reducing debt is simply not possible. And without reducing debts, we cannot achieve growth.”

Pierre Moscovici

Handelsblatt: What will be your priorities as a commissioner?

We have one common goal above all: fostering growth and employment. The European [parliamentary] elections offered a clear warning. Many citizens don’t see Europe as part of the solution but as part of the problem. We are seeing anti-European movements , including in Germany, as recent elections in Saxony have shown. All of us – Germans, French, conservatives, socialists – must once again turn Europe into a common project that gives people hope.

Handelsblatt: So, growth now comes before reducing debt?

There is no contradiction here! Without growth, reducing debt is simply not possible. And without reducing debts, we cannot achieve growth. We must be tough on deficit cutting and ambitious on growth. The EU Commission wants to mobilize E300 billion in private and public investment.

Handelsblatt: Such billion-euro initiatives have been frequently announced in the past, for example as part of the Growth Pact, yet unemployment remains unchanged at high levels. There doesn’t seem to be a lack of money, but a lack of ideas on how to spend it wisely.

We are seeing investment gaps in all [EU] countries. Many small and medium-sized businesses are not getting the financing they need to invest properly, and yet there is plenty of liquidity in Europe. There are massive amounts of reserves, but they are not being invested. We must solve these problems. Project bonds and the European Investment Bank can help.

Handelsblatt: In May 2013 you said that the “austerity dogma” had come to an end. What did you mean by this?

Austerity means completely ignoring the question of growth. We cannot afford this anymore.

Handelsblatt: Where did this dogma come from? Government debt in Europe has grown over the last few years, not shrunk.

The euro zone has suffered stagnation for the last six years. Most countries are only now reaching the level of economic output of 2008. The only exception to this is Germany. How can you expect people to have confidence in Europe, to believe in the euro, when they have no hope? We must get out of this stagnation trap. If not, our democracy will suffer.

Handelsblatt: Mr. Moscovici, thank you for the interview.

The interview was conducted by Jan Hildebrand. He can be reached at

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