The head of Germany’s Bundesbank, Jens Weidmann, said France needs to make additional efforts to reduce its public deficit, in an interview published Wednesday.
France was originally supposed to bring its public deficit back to the EU’s ceiling of 3.0 percent of gross domestic product, but has won a two-year extension from the European Commission.
Given that the Commission, the EU’s executive arm, now expects France’s public deficit to widen further next year after a forecast of 4.9 percent this year, Weidmann told the Le Point weekly that “additional measures will therefore be necessary.”
He also warned against the trap of over-optimistic growth forecasts.
“It would be good to avoid a repetition of the errors we Europeans have often committed in the past and to not base our budgetary plans on economic forecasts that are too optimistic,” Weidmann said.
After having to revise its forecasts down to zero growth for this year, France’s expectations for 1.2 percent growth next year is still superior to the 0.9 percent expected by the European Commission and International Monetary Fund.
Considered a monetary and fiscal conservative, Weidmann also spoke out against the idea of issuing joint eurobonds, an idea favoured by some EU states including France, as a way of reducing borrowing costs for weaker eurozone states.
He asked if eurozone states were ready to give up control over their budgets, as eurobonds “can’t come into being until the end of the road towards a federal Europe, which would ensure a balance between the Europeanisation of debt and (budget) control.”
Weidmann begins a two-day visit to Paris on Thursday.
Germany's Bundesbank chief says France must cut deficit
