Worries over 'strong franc' overshadow budget debate
Wednesday 18 October 1995
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.
- 1 Bill Clinton portrait features Monica Lewinsky reference, artist admits
- 2 What happens to your body when you give up sugar?
- 3 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 Average penis size revealed: Scientists attempt to find what is 'normal' to reassure concerned men
Bill Clinton portrait features Monica Lewinsky reference, artist admits
Japanese island overrun with cats after population explodes
China's 'Inconvenient Truth': video exposing country’s smog crisis watched 100 million times
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
The 'sex selfie stick' lets you FaceTime the inside of a vagina
New theory could prove how life began and disprove God
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
This is what it's like to be dead, according to a guy who died for a bit
Durham Free School: 'Creationism taught at' free school facing closure
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
£25000 - £35000 per annum: Recruitment Genius: Have you got a proven track rec...
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£38000 - £48000 per annum: Recruitment Genius: This B2B content marketing agen...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...