Handelsblatt: Monsieur Moscovici, after the terrorist attacks in Paris, French President François Hollande said that the “security pact” would be more important in the future than the E.U. Stability Pact. Will his country now borrow money without inhibition?
Mr. Moscovici: I was born in Paris, and I experienced the collective shock first-hand when I was there on the day of the attacks. The situation reminded me of September 11, 2001. I was in a plane over New York when the World Trade Center collapsed. At the time, a huge country came to a standstill all at once, and we are now experiencing something similar in France. I can understand very well that France’s entire political class is now declaring national security as its top priority. Eurogroup President Jeroen Dijsselbloem and German Finance Minister Wolfgang Schäuble also immediately expressed their sympathy for that.
Don’t the attacks offer France a perfect excuse to continue to stubbornly ignore European deficit limits?
It would be absurd to require France to save the additional costs it incurs for security in other areas. Besides, the sums we are talking about here will not significantly affect French budgetary development. The country can expect additional expenditures of less than 0.05 percent of the gross domestic product (GDP). This will not prevent France from meeting its deficit targets for 2016 and 2017. The European Commission should show some understanding in this case.
The European Commission has already indulged France to a considerable extent. Paris has violated the deficit rules for years, and the budget deficit is not expected to fall below the prescribed level of 3 percent of GDP until 2017. Is that even realistic anymore?
The European Commission unanimously arrived at the assessment that France is largely adhering to the rules of the Stability Pact. According to our forecasts, the French budget deficit will still be slightly higher than 3 percent in 2017. But the target is certainly achievable if the government in Paris makes additional cuts in that year, provided economic growth remains on track.