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Hollande warns EU budget cuts must not hurt growth

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(Globalpost/GlobalPost)

French President Francois Hollande warned Tuesday that cuts to the EU's trillion-euro budget for 2014-20 were needed but must not be allowed to undercut fragile growth.

"Yes, make cuts but weaken the economy, no," Hollande told the European parliament just days before EU leaders take up the hotly contested budget again.

A bad-tempered November summit failed when several member states, led by Britain, called for sharp budget cuts at a time when all governments were having to reduce spending so as to balance the public finances.

Hollande insisted that France was committed to the European project, an economic and social model "envied on all other continents," but the debt crisis meant that many people were losing faith, putting national interests first.

"The eurozone crisis is to a great extent behind us but the challenge today ... is the mistrust of our people," he said.

Against this backdrop, EU could not simply adopt tough austerity policies -- "France will not accept that," he said -- and so had to ensure that core spending remained in place to promote vitally needed growth.

The French president said Cohesion Funds and the Common Agriculture Policy -- the EU's main spending commitments and key targets for those seeking cuts -- were essential in developing the union.

"All of us benefit from that in terms of growth ... we cannot set the one (policy) against the other," he said, adding that the 2014-20 budget must support the growth commitments agreed at a key June summit.

The budget must also "support the most vulnerable, those most exposed to the crisis, the poorest," Hollande stressed, highlighting the dangers of soaring unemployment, especially among the young.

Hollande had warned at the weekend that "the negotiations are very difficult ... the conditions are, at this moment, not yet in place" for an accord at the summit in Brussels on Thursday and Friday.

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http://www.globalpost.com/dispatch/news/afp/130205/hollande-warns-eu-budget-cuts-must-not-hurt-growth