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Last Updated: Monday, 24 September 2007, 09:22 GMT 10:22 UK
ECB attacks France over finances
ECB chief Jean-Claude Trichet
Mr Trichet has called on France to act to improve its budget balance
European Central Bank chief Jean-Claude Trichet has attacked France for being Europe's "number one spender".

Mr Trichet warned that in comparison to its GDP, the country was well on the way to spending much more than its European neighbours during 2007.

The warning came as Prime Minister Francois Fillon warned that France's finances were in a "critical" state.

French finances have caused friction with Europe, with France under pressure to cut its budget deficit.

Meanwhile, France has attacked European Central Bank policies saying they are to blame for poor growth and the strength of the euro - which is currently trading at record highs against the dollar.

Social security budget figures released last week compounded France's problems, as they showed a larger-than-expected deficit for this year.

The forecast for the social security deficit rose to 11.7bn euros (8.1bn; $16.5bn) from a previous figure of 8bn euros.

Problems

"Public finances are in very great difficulty,'' Mr Trichet told Europe-1 radio, adding that Mr Fillon "probably was right to underscore that'.'

"Careful management of public finances is very important and obviously, in the eyes of the Commission as well as the European Central Bank, France must respect its commitments," he added.

Earlier this month eurozone finance ministers told their French counterpart Christine Lagarde at a meeting in Portugal that Paris had to beef up its plans to rein in its deficit.

President Sarkozy has vowed to try to erase the deficit by 2010, but says he cannot guarantee it will happen until 2012.

The French leader wants to cut taxes, a move that means France will breach a rule set by the EU on public deficits, in order to avoid an economic slowdown.

Mr Sarkozy argues France needs to cut taxes by 11bn euros to tackle its spiralling unemployment problem.



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