MNI: Brussels To Cling To Barnier Govt Spending Control Pledge

MNI (LONDON) - France's commitment to limit future public spending growth to an average 1.1% a year will be the European Commission's key metric for assessing whether any new or amended budget or fiscal plan is in line with EU fiscal rules, Brussels officials told MNI. 

"Any major deviation (from the planned 1.1% spending profile), leading to a dramatic impact on the future trajectory of France's deficit and national debt we would certainly sound the alarm bell," one source said.

The EU Commission and Eurogroup are watching political developments in France closely but have so far refrained from any public warning on potential fiscal slippage in the country, whose deficit is expected to climb to over 6% of GDP this year. (See INTERVIEW:  Fiscal Contraction To Give ECB More Room To Cut)

BELEAGUERED

Beleaguered French Prime Minister Michel Barnier, who faces a confidence vote in the National Assembly tonight, secured the Commission's approval for his seven-year fiscal-structural plan that pledges to adhere to annual average net spending of 1.1% across the period, including zero growth next year. The 2025 budget, with its promised EUR60 billion of tightening measures, is expected to fall if the Barnier government collapses.  

As reported on Tuesday, the Eurogroup plans to issue a statement on the euro area's fiscal stance next Monday, calling for budget discipline and commitment to the new EU fiscal rules, but for the moment it is understood that the Commission will not take any action related specifically to France and fiscal developments.