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Rift grows within French government over pace of cuts
April 10, 2013 / 2:00 PM / 5 years ago

Rift grows within French government over pace of cuts

* Hollande says will not change course over deficit cuts

* Three ministers say austerity measures should be eased

* Mini-revolt in parliament poses new test for president

By Catherine Bremer

PARIS, April 10 (Reuters) - French President Francois Hollande promised on Wednesday to stick with deficit-reduction plans, despite stirrings of a revolt within his Socialist government over cuts that critics say bow too much to German demands for austerity.

Hollande is seeking more than 60 billion euros of savings to balance the budget by the end of his mandate in 2017, arguing that knocking public finances into shape must go hand in hand with efforts to restore jobs and economic growth.

“It’s by following reforms that we have begun that France will be best placed to shift Europe’s priorities to growth,” he told a news conference.

“The goal is growth, the requirement is job creation. This policy has been fixed, I will not alter it,” he said, insisting the budgetary rigour could not be classified as “austerity” - the term used to describe similar reforms in Italy, Spain and Portugal.

Benoit Hamon, junior minister for consumer affairs, was the latest minister to disagree, calling on Hollande on Wednesday to back away from measures he said could stir nationalist sentiment in France and elsewhere in Europe.

“Deficit-cutting is a marathon. You don’t finish a marathon by running at the pace of a 400-metre sprinter,” Hamon told the daily Le Parisien.

“Germany is demanding that we sprint at a time when France needs to get its breath back. If that continues, nobody will finish the race,” he added, insisting he remained loyal to Hollande despite opposing the spending cuts.

Leftist Industry Minister Arnaud Montebourg and Housing Minister Cecile Duflot, a leading figure in Hollande’s Green coalition allies, made similar comments this week.

The mini-revolt comes after 35 Socialist lawmakers abstained in Tuesday’s parliament vote on Hollande’s shake-up of rigid French labour laws - the most important reform yet of his 11-month-old government and one that was easily approved because opposition conservatives also abstained.

Hollande’s government has acknowledged it will miss a target of cutting the deficit to three percent of output this year from 4.8 percent in 2012, but has promised to do so by 2014 en route to a goal of balancing the budget by 2017.

“ABSURD AND DANGEROUS”

The rift on the left, fanned by a feeling among some that Hollande is abandoning his Socialist roots, is a new headache for a president stuck with dismal ratings and struggling to persuade the world that he can repair the sickly economy.

Hollande, who is also planning a pension overhaul in the months ahead, has a comfortable parliamentary majority with his far-left and Green allies on board, but on its own, his Socialist Party only has an absolute majority by five seats.

While he challenged German Chancellor Angela Merkel’s focus on austerity when he took power 11 months ago, the reality of stalled growth has since prompted Hollande to raise taxes and order sweeping spending cuts.

Montebourg, the most left-wing minister in the government and known for his outspoken remarks, also said it was time for a debate on harmful austerity policies detested by the public.

“If budget responsibility means killing growth, then it’s not longer responsible. It’s absurd and dangerous,” he said in an interview with Le Monde daily. “It is high time we opened a debate on a policy which is leading the EU into collapse.”

Housing Minister Cecile Duflot also called this week for a change of course from focusing solely on cutting spending.

In Paris on Tuesday, U.S. Treasury Secretary Jack Lew voiced his concerns on keeping a balance between growth and austerity, , while Bank of France Governor Christian Noyer noted that France had not suffered wage or welfare cuts.

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