Worries over 'strong franc' overshadow budget debate

The French National Assembly yesterday opened a two-day debate on the 1996 budget that promised stormy arguments about public spending priorities, means-testing of benefits and job-creation schemes. The debate threatened to be upstaged, however, by the old controversy over interest rates and the value of the franc.

The opening salvo was fired on Sunday by the National Assembly chairman, Philippe Seguin. Addressing Gaullist party delegates gathered for the election of Alain Juppe as party leader, Mr Seguin sketched out what appeared to be an alternative government programme, whose priority would be "cutting the domestic budget deficit".

His call to cut the deficit, expected to reach 340bn francs (pounds 45bn) by the end of this year, was accompanied by an appeal for a reduction in interest rates, which he said were destroying chances of economic growth. Mr Seguin's attack on interest rates that are among the highest in Europe appeared directed not just at the Bank of France but at the government's"franc fort" policy, which is seen as handicapping France in the international labour market.

Until now, Mr Seguin's position might have been interpreted as lobbying for the abandonment of European monetary union. The rationale behind the "strong franc" policy is to keep the rate of the franc consistent against the German mark in preparation for the introduction of the single currency in 1999. The deficit has to be cut to 3 per cent of GDP for the same reason: to meet the Maastricht "convergence criteria".

But Mr Seguin, who campaigned against the Maastricht treaty, said he now accepted the single currency. His remarks can only be reconciled if they are seen as a call for the rate of the franc against the mark to be renegotiated at a lower level.

Mr Seguin is not alone in suggesting that France ought to abandon the "strong franc".Monday's Le Monde published three authoritative articles on different aspects of the case.

One, by Jean-Pierre Chevenement, a former minister, said monetary union had proved too divisive. Another, by Professor Gerard Lafay, an academic economist, called for the governor of the Bank of France to be replaced, and with him, the "strong franc". The third, from an employers' representative, said high interest rates were preventing job creation.

However, the question is whether President Chirac, whose campaign pledges included the "strong franc" policy, could break that promise.

n

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
Jamie and Emily Pharro discovering their friend's prank
video
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Arts and Entertainment
tv
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Arts and Entertainment
The eyes have it: Kate Bush
musicKate Bush asks fans not to take photos at London gigs
News
i100
Extras
indybest
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Marketing & Commnunications Executive, London

£30000 - £34000 per annum: Charter Selection: This highly successful organisat...

Residential Property

Very Competitive: Austen Lloyd: Residential Conveyancer - Wiltshire We have a...

Property Finance Partner

Very Competitive Salary: Austen Lloyd: LONDON - BANKING / PROPERTY FINANCE - ...

Defendant Personal Injury 2+PQE

Excellent Salary : Austen Lloyd: BRISTOL - NICHE DEFENDANT FIRM - Defendant Pe...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment