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

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
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

Recruitment Genius: Key Sales Account Manager - OTE £35,000

£25000 - £35000 per annum: Recruitment Genius: Have you got a proven track rec...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Recruitment Genius: Senior Designer / Design Director

£38000 - £48000 per annum: Recruitment Genius: This B2B content marketing agen...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn