Hollande to hold tough on growth plan

French president-elect François Hollande signalled to Germany yesterday that he will not be deflected from his drive to change Europe’s focus from austerity to growth after German chancellor Angela Merkel rejected any economic stimulus on credit.

Mr Hollande met Eurogroup president Jean-Claude Juncker in Paris as he tries to rally European partners to support his push to change the focus of eurozone policy.

He will travel to Germany on Tuesday after his inauguration to press his demand to add growth measures to Europe’s budget discipline treaty with Ms Merkel.

The chancellor told parliament in Berlin that “growth on credit” would just tip Europe deeper into crisis, rejecting stimulus policies that would require new debt.

French Socialist Party spokesman Benoit Hamon said: “Angela Merkel is sticking to her position but she cannot override the will of the French people.”

Mr Juncker, head of the Eurogroup of eurozone finance ministers and prime minister of Luxembourg, declined to comment on the substance of his hour-long meeting with Mr Hollande.

He said on Monday he had told the president-elect by telephone that growth elements could be tacked on as long as the fiscal pact was not altered.

Ms Merkel has insisted the essence of the treaty could not be unpicked but Socialist party heavyweights have insisted Mr Hollande would not submit the pact for ratification unless he can get pro-growth elements added to it.

Mr Hollande may have to promise to pass a “super-law” committing France to stick to deficit-cutting targets in return for German acceptance of some of his plans for growth-stimulating instruments.

He has already vowed to pass legislation that would force the government to meet targets, a move that should satisfy the fiscal pact signed by 25 EU leaders in March. Yet, it could be tricky for him politically to give Berlin a firm promise a month from a parliamentary election in which he is anxious to win a clear left-wing majority.

Ms Merkel insisted there is no alternative to the debt-and deficit-reduction programmes being demanded of countries like Greece. But she is open to Mr Hollande’s ideas now he has stopped publicly demanding the creation of common eurozone bonds.

Mr Hollande is proposing four ideas: more financing for the European Investment Bank, European “project bonds” to fund infrastructure programmes, the creation of a financial transactions tax and better use of EU structural funds.

His aides say he will seek a compromise with Ms Merkel.

Reuters