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Friday, 5 July, 2002, 02:49 GMT 03:49 UK
European Bank chief criticises France
Wim Duisenberg
It is unusual for Duisenberg to single out an individual country

The head of the European Central Bank has delivered an unprecedented criticism of the French government.

Speaking in Luxembourg, ECB president Wim Duisenberg accused France of unilaterally reinterpreting eurozone rules on budget deficits.


Mr Duisenberg accused France of making a unilateral declaration and called on all governments to stick unconditionally to the rules

The move followed a warning by France last month that it would only meet an EU target for balancing its public finances if the country's economic growth reached 3% next year.

It is highly unusual for Mr Duisenberg to single out an individual eurozone country.

In veiled bankers' language he implied that France's declaration making budget discipline conditional on economic growth was a potential threat to the stability of the euro.

Mr Duisenberg accused France of making a unilateral declaration and called on all governments to stick unconditionally to the rules.

Optimistic target

Since elections last month, the new French government has said that it will not eliminate its budget deficit by 2004, an agreed EU deadline if growth falls below its target.

Mr Duisenberg made clear he believes that target, 3% growth in each of the next two years, is optimistic.

The French action has also strained relations with Berlin - German officials believe a costly election pledge to cut taxes is undermining Paris' commitment to financial discipline.

France has admitted that its deficit this year will be near 2.5% of economic output - that is much higher than forecast and close to the 3% euro zone limit.

Germany faces a similar overshoot but has insisted it will make every effort to stay within the rules.

See also:

01 Jul 02 | UK Politics
01 Jul 02 | Business
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27 Jun 02 | Business
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