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EU backs French budget but doubts remain

Thursday, September 26, 2013 - 01:28

Sept 26 - A new budget was meant to quell concerns about France's commitment to economic reforms but disquiet is growing and Finance minister Pierre Moscovici has gone to Brussels to try and convince the rest of Europe it's doing enough. Melanie Ralph reports

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Just 24 hours after presenting his budget France's Finance Minister is rejustifying it to Europe To the relief of Pierre Moscovici it got the thumbs up from EU Commissioner Olli Rehn. (SOUNDBITE) (French) EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN, SAYING: "France has made a huge effort to restore its public finances, and this draft budget law is characterised by responsibility and prudent policy making, and the hypotheses which are the basis of this draft law are very likely to materialise." Not everyone's convinced. France has faced tough criticism for not pushing through enough structural reforms - particularly to its pension system and government spending. Rehn avoided the subject of pensions even though France hasn't raised the retirement age as demanded by the Commission. His confidence hasn't reached markets either. With France's economy lagging well behind neighbour Germany, investors remain skeptical about the budget plans. Commerzbank's Peter Dixon says the euro zone's second largest economy has a 20 year history of failing to reform. (SOUNDBITE) (ENGLISH) PETER DIXON, GLOBAL EQUITIES ECONOMIST, COMMERZBANK, SAYING: "I think its being pushed to the reform table a bit unwillingly, but I think that French politicians realise that if they really start to engage in any form of significant restructuring at home, this is going to inflame the partners in the social pact, notably the trade unions." Trade unions may not like it but the problem isn't going away. A hole in the pension pot could reach 21 BILLION euros by 2020.

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EU backs French budget but doubts remain

Thursday, September 26, 2013 - 01:28