France Urges Cooling Of Austerity, Focus On Growth


BRUSSELS (AP) â¿¿ France has called on fellow European nations to ease off on painful austerity policies to give the economy some breathing space and avoid social upheaval.

Continuing a strict course of spending cuts and tax increases would only "nourish a social crisis that leads to populism," French Finance Minister Pierre Moscovici warned Thursday.

"There is no alternative to starting a path that will lead to a return of growth," he added, speaking at a conference of the European Parliament's group of center-left parties in Brussels.

France's appeal comes as the three-year debt crisis in the group of 17 European Union countries that use the euro is easing. Investors and financial markets have grown calmer in the wake of political and economic reforms and a pledge by the European Central Bank to do whatever it takes to defend the common currency.

But the austerity cuts made to restore confidence in financial markets have helped push the region into recession and increase unemployment to record highs. Voters in several crisis-hit nations have protested such EU-led austerity by supporting euroskeptic parties, most recently in Italy.

Moscovici stressed Italy's election result "was a message" that insisting on the current pace of budget cuts and structural reforms without a credible growth strategy is not sustainable and will ultimately backfire.

The minister reiterated his demand that the eurozone should have its own budget to finance initiatives favoring job creation and growth. Germany, which together with France makes up almost half of the bloc's economic output, has signaled it is open to that idea, but Chancellor Angela Merkel has floated a maximum ceiling of about ⿬15 billion ($19.52 billion) ⿿ a small sum compared to the bloc's annual GDP of ⿬10 trillion.

Moscovici provided few other details on what growth-friendly initiatives or policies he wants Europe to pursue, but vowed that France will push for a substantial debate on the matter at next week's summit of the European Union's 27 leaders.

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