France must chart own path to EU deficit goal-minister

Sat Sep 29, 2012 10:40am EDT

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PARIS, Sept 29 (Reuters) - French Finance Minister Pierre Moscovici said on Saturday cutting the public deficit to three percent of economic output next year was a realistic goal and France must set its own course to reaching it to preserve its independence.

The Socialist government unveiled a tough 2013 budget on Friday that slaps higher levies on business and a 75-percent tax on the super-rich but does not reduce public spending, to the dismay of pro-reform lobbyists.

Moscovici defended the approach in an interview with Le Monde newspaper, arguing that harsher austerity measures being imposed in Spain, Greece and Italy were not appropriate for France and would undermine its independence.

"Other countries succumbed to budgetary carelessness and ended up in the hands of the market, hands and feet chained," he said. "They fell into recession and their unemployment rates have worsened in a climate of widespread social tension."

"That's why the 3-percent target - a condition for debt-clearing and returning to growth - is neither biased nor out of reach. France can and must achieve it."

With record unemployment and a barrage of data pointing to economic stagnation, economists have highlighted a risk of missing the target if France were to fall short of a modest 0.8 percent forecast for growth next year.

Moscovici called the growth target "ambitious, but realistic", and said the government should be judged on the result of its economic policies, not their method.

"I accept Europe's demands, I respect France's commitments, but I refuse to have outsiders put their fingers into the French welfare system. It needs to be reformed, not broken," he said.

As German Chancellor Angela Merkel and European Central Bank governor Mario Draghi maintain pressure on euro zone states to pursue structural reforms, Moscovici pointed to overhauls of labour and welfare planned for next year.

However, the 55-year-old poured cold water on Merkel's calls for a new European treaty to deepen integration in the bloc, saying it was "not a current question" - despite another public official hinting at openness to the idea.

On a planned merger between European aerospace group EADS and British defence contractor BAE Systems Plc , Moscovici said a variety of "complex" concerns still needed to be addressed.

"France has a particular stake on this issue, that of a state that is both sovereign and stakeholder, and wants to remain so," he said.

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