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While acknowledging that a downgrading of the country’s triple A rating by credit rating agencies would certainly pose an additional difficulty, French President Nicolas Sarkozy nevertheless insisted that it was not an insurmountable problem, underlining the need above all for credibility as regards France’s economic policy and its determined strategy to reduce spending.
Providing his assurances that the commitments undertaken by France will be respected, the French President explained that the government has already taken, or is in the process of taking, the necessary measures to convince investors.
According to President Sarkozy if the government had not embarked upon pension reform in France in 2010, accelerated recently with the framework of the country’s second austerity package, it would only be delaying the inevitable.
Otherwise, there is no key measure or “miracle”, Sarkozy remarked, noting that what counts ultimately, as much as measures aimed at reducing spending, are initiatives intended to increase growth, for example the development of the research tax credit and the abolition of local business tax in France.
Alluding to plans to anchor a debt brake rule in the constitution, the President underscored that such a rule is merely a rule of common sense, with budgets constructed over several years with the overarching aim of progressing towards budgetary balance.
As regards the decisions taken at the European Union summit meeting in Brussels, President Sarkzoy emphasized that the key points of agreement marked a decisive step towards European integration, creating the necessary conditions to exit the crisis.
According to Sarkozy, the agreement responded to the crisis and to the concerns of rating agencies, by first of all creating true economic governance, vital, he added, to conserving the single currency in the long-term, with responsibility for economic governance returning to EU heads of state and government, and with the European Commission tasked clearly in future with the role of ensuring treaty compliance and with the application of automatic sanctions.
The second element of the accord, Sarkozy continued, involves plans to strengthen European solidarity, notably by creating a European monetary fund, the European Stability Mechanism (ESM), due to be implemented in July 2012, instead of July 2013, as originally envisaged, which aims to support eurozone member states in need, and requiring a qualified majority of 85%.
Sarkozy also underlined the importance of the third element of the agreement, notably plans for fiscal discipline.
The French President confirmed that the legal content of the agreement would be finalized over the course of the coming weeks, with the aim of arriving at a treaty in March, and implementation in summer 2012.
Underscoring that the key words in the new Europe will be economic convergence, fiscal rules and taxation, Sarkzoy highlighted the fact that member states will work together towards reform, to enable all countries to become more competitive. The stability of the continent is at stake, he added.
Lamenting the fact that the UK elected to veto the intergovernmental agreement, President Sarkozy explained that Prime Minister David Cameron’s demands for protection of the UK’s financial services were not acceptable, given that the crisis arose as a result of financial deregulation. It is imperative now not to take a step backwards but to progress towards greater regulation, the President argued.
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