French Minister of Economy and Finance Pierre Moscovici has found the time in his first year and a half in that job to write a book about it. We interviewed him on the European dimension.
Giovanni Magi, euronews: “One of your goals, as you have written in your book “Combats”, is to re-orient European policy to make Europe an area of economic growth. The latest forecasts show that this goal has yet to be achieved. Is it a matter of time or is it necessary to change policy?”
Pierre Moscovici, French Economy and Finance Minister: “We are seeing that the euro area and the whole of Europe are coming out of recession. We really have put recession and excessive austerity behind us. The second conclusion is that we have to go further to ensure that Europe really is an area of growth, prosperity and social progress, since growth and social justice go together.”
euronews: “There is clearly a problem of governance in Europe; you also write that the European crisis is political rather than economic. Is it realistic today to push towards a European political union?”
Moscovici: “Yes, I think so, and in particular it is necessary to strengthen the governance of the euro area. France is making – I am making – several proposals: the first is to create a budget for the euro zone to play a counter-cyclical function, including a common base for ensuring minimum unemployment compensation. The second thing is it’s important that in the next parliament, to be elected next May, that it be an assembly which represents the euro area countries, so that we can talk together about common legislation. I also suggest that there be a permanent and exclusive President of the Euro Group who is not a minister in his own country. In my mind it should also be the Commissioner for Economic and Monetary Affairs; he would be a sort of Minister of Finance for Europe and the euro area, be a clear voice capable of helping to fix positions. Adding a fourth proposal, I say that we absolutely must have a banking union.”
euronews: “About a banking union, an agreement on the monitoring mechanism has been found, but the implementation of the single resolution mechanism looks more difficult. Will it be possible to find a common position with Germany?”
Moscovici: “We’ll have to find those common positions. What is true is that we are in a somewhat intermediate position, as Germany, following its elections, is involved in coalition talks which are long, complicated and demanding, since the coalition agreement must be an extremely accurate document. But I’d like us to reach an agreement on the mechanism of resolution by the end of this year, 2013. And – this is fundamental to me – we must finally make it so that without going through governments the European Stability Mechanism that we created can intervene in direct recapitalisation of banks that need this solution.”
euronews: “Standard & Poor’s recently downgraded France’s credit rating. At the same time we are witnessing, in France, the explosion of protest movements against taxes. One has the impression that there are not many people who believe in your policy reforms.”
Moscovici: “First, a word about Standard & Poor’s. The rating agency downgraded France, reducing its rating. I note, however that it is still a credible, serious country. The markets – investors – have shown that they continued to trust in France, since the effect in terms of interest rates – the so-called spread – was zero or nearly zero. I find that Standard & Poor’s – why I say that the critics were excessive and inaccurate – has not given sufficient confidence in the strength of reforms which we support. For the rest, to talk about the climate in France: what is true now is that we need to put our fiscal reforms mainly toward savings in public spending. The tax leverage, the weariness expressed, is also due to our compulsory levy rate above 46 percent. I am a strong supporter of taxation; citizens’ agreement to being taxed is a Republican action, and taxation is the major driver of welfare state tools that the French people want. But at the same time we are finding it is difficult to go further, which means that flexibilities are to be found on expenditure savings .
euronews: “In the last year, France has had 1,000 social plans for workers’ layoffs; others are unfortunately on the horizon. Is it realistic to expect a reversal of the unemployment trend by the end of the year?”
Moscovici: “Yes, because first we must fight social plans. A social plan doesn’t mean that all jobs are lost; fortunately, lots of jobs are saved; companies find solutions for buyers, and so avoid total social employment destruction. The government is fighting, the government is in a battle against social plans to lay workers off. There is another feature of France that is all those companies that are performing well, companies that are investing, new companies that create jobs, but about which we do not talk enough. Sometimes our media don’t talk about