France has called on fellow European nations to ease off on painful austerity policies to give the economy some breathing space and avoid social upheaval.
Continuing a strict course of spending cuts and tax increases would only “nourish a social crisis that leads to populism,” French Finance Minister Pierre Moscovici warned on Thursday.
“There is no alternative to starting a path that will lead to a return of growth,” he added, speaking at a conference of the European Parliament’s group of center-left parties in Brussels.
France’s appeal comes as the debt crisis, which had grown to threaten the 17-nation eurozone’s existence over the past three years, is easing in financial markets in the wake of political and economic reforms and a pledge by the European Central Bank to do whatever it takes to defend the common currency.
But the austerity cuts made to restore confidence in financial markets have had nasty side-effects on the economy. Voters in several crisis-hit nations have protested against such EU-led austerity by supporting euroskeptic parties, most recently in Italy.
Mr Moscovici stressed Italy’s election result “was a message” that insisting on the current pace of budget cuts and structural reforms without a credible growth strategy is not sustainable and will ultimately backfire.
The minister reiterated his demand that the eurozone should have its own budget to finance initiatives favouring job creation and growth.
Mr Moscovici provided few other details on what growth-friendly initiatives or policies he wants Europe to pursue, but vowed that France will push for a substantial debate on the matter at next week’s summit of the European Union’s 27 leaders.
“It has to be done in a way that people, citizens can recognize the reform process, can support it finally and can see some hope, some light at the end of the tunnel, which is not the case today,” said the European Parliament’s center-left caucus leader, Hannes Swoboda.
“More and more citizens today identify Europe with austerity, unemployment and perhaps even authoritarian dominance from outside,” Swoboda said.
France hopes the EU Commission, the bloc’s executive arm that monitors compliance with debt rules, will grant the country a delay of one year to reach its deficit target, he indicated.
The European Commission last month lowered its 2013 economic growth forecast for France to a meager 0.1 percent.
New data on Thursday also showed that the unemployment rate in France is still rising. It was up to 10.6 percent in the fourth quarter of 2012 from 10.3 percent in the previous three-month period, according to France’s statistics agency.