* Asmussen says France should hit target this year
* Germany, France should set example to other EU states
* France, Germany at odds over how to tackle downturn
By Michelle Martin
BERLIN, Feb 15 The senior German policymaker at
the European Central Bank urged France on Friday to cut its
public deficit below the EU ceiling, highlighting a problem that
threatens a policy rift between the euro zone's top economies.
French Prime Minister Jean-Marc Ayrault said on Wednesday an
economic slowdown meant France would fail to cut its public
deficit from 4.5 percent of output in 2012 to the official EU
ceiling of 3 percent in 2013.
Joerg Asmussen, who sits on the ECB Executive Board and is a
former deputy finance minister in the administration of
Chancellor Angela Merkel, said that Germany and France needed to
set an example to other European states.
They had special responsibility for the stability upholding
the European Union's stability and growth pact, and "I
personally think it is very important that France keeps its
deficit below 3 percent this year," he told Germany's
German finance ministry spokesman Johannes Blankenheim said
European treaties needed to be fulfilled: "Clearly from our
point of view the consolidation strategy being pursued in member
states must continue to be implemented successfully and
consistently and all of the necessary measures for this must be
taken," he said at a regular government news conference.
Berlin has been a tireless advocate of fiscal discipline
among euro zone states, while divisions between the two capitals
have also emerged over currency policy.
Germany rejected French President Francois Hollande's call
to set a mid-term target for the euro, which earlier this month
hit a 15-month high against the dollar before easing slightly.
On Friday, before a meeting of Group of 20 financial leaders
in Moscow, Asmussen joined ECB President Mario Draghi and fellow
German governing council member Jens Weidmann in pushing back
against political pressure to target the euro's exchange rate.
On Thursday Olli Rehn, the EU's top economic official told
finance ministers euro zone countries could have extra time to
meet deficit-cutting goals if the growth outlook deteriorated.
The French economy contracted by a worse-than-expected 0.3
percent in the final three months of 2012, edging closer to
recession, while the euro zone as a whole shrank by 0.6 percent.
Asmussen said a country's economic situation needed to be
taken into account. But while the stability and fiscal pact
stipulated a country could have more time to meet its deficit
goals if its economy unexpectedly and significantly
deteriorated, it also required the country to prove it had taken
effective measures to cut its deficit.
Asmussen said he could not say whether France would be
allowed more time under EU budget rules until new growth figures
for the euro zone's second biggest economy were released next
Asked if states were likely to ask the ECB to buy their
bonds given weak growth, Asmussen said while fourth-quarter
growth figures for the euro zone were not good, there were signs
this quarter that the economy was picking up.
Asmussen also said the ECB wanted currency exchange rates to
"In the last couple of days the Group of Seven biggest
industrial nations made clear once again that currency exchange
rates should be market-based and that we have no exchange rate
targets and that's true for us at the ECB too," he said.