* EU's Rehn avoids criticism of France's reform plans
* French budget sees deficit nearer EU levels next year
By Robin Emmott
BRUSSELS, Sept 26 The EU's economics chief put
aside any frustration with the pace of French reforms on
Thursday, telling France's finance minister that his budget
plans were on track and avoiding mention of ballooning pension
Relations between Brussels and Paris have been tense since
the European Commission, the EU executive, told France to cut
spending and reform its pension system in return for a two-year
reprieve on meeting European budget targets.
President Francois Hollande has warned the Commission not to
tell France how to modernise its frail economy but his finance
minister Pierre Moscovici still sought to reassure Brussels, a
day after presenting the French budget for 2014.
"France has made a huge effort to restore its public
finances, and this draft budget law is characterised by
responsibility and prudent policy making," Olli Rehn, the EU's
economic and monetary affairs commissioner told a joint news
conference with Moscovici, waving a copy of the French budget.
Rehn made no mention of Hollande's pension reform plans,
which do not raise the country's retirement age as the
Commission has demanded. Germany also wants to see the euro
zone's second largest economy address overspending.
Brussels says Paris is not taking radical enough action to
combat rising labour costs, a falling share of international
export markets and an industrial decline, threatening a shock to
its economy that would resonate through the 17-nation euro zone.
France's economic well-being is central to the health of the
currency area, but the country's pride in its status as a
leading member of the European Union means it resists taking
advice from EU institutions.
The pension reform, among the most closely watched measures
undertaken by Hollande since he took office in May 2012, aims to
fill a hole in the pension system that could reach almost 21
billion euros ($28 billion) by 2020.
Though Hollande's reform will lengthen the number of years
worked, it does not change the legal retirement age of 62 years
for a full pension, which is one of the lowest in Europe.
In the shadow of the pension reform, Moscovici presented
France's 2014 budget to parliament on Wednesday. He plans 15
billion euros in savings to reach a deficit of 3.6 percent of
economic output, which should allow Paris to bring the budget
deficit to below the EU's 3 percent ceiling in 2015.
Under EU rules, sharpened at the peak of the debt crisis in
late 2011, euro zone countries can face fines if they fail to
meet deficit targets and risk damaging investor confidence.
Moscovici was also keen to convince Rehn, who has new powers
to check countries' budgets, that France's planned budget
savings and economic forecasts are in line with its commitments.
He also sought to play down any suggestion that France would
not respect the Commission's new monitoring powers.
"Europe does not pose a constraint. Europe is not a problem.
In France, Europe is a solution," Moscovici said.
In one of the most far-reaching responses to the region's
debt crisis, euro zone countries must submit their draft 2014
budgets to the Commission by October 15. They will then be
scrutinized for any shortcomings, including unrealistic revenue
projections or insufficient spending cuts.