Austerity row sparks political crisis for France

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Austerity row sparks political crisis for France

Austerity row sparks political crisis for France
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A bitter battle over France’s economy has created a crisis for the government and for president Francois Hollande.

Former economy minister Arnaud Montebourg’s demand that the government abandon austerity triggered the dissolution of the cabinet.

Montebourg said: “Austerity policies of tax hikes and excessive reduction of public spending, decided by governments, are today causing the extension and unnecessary deepening of the economic crisis.”

“They are a financial absurdity because, by restricting growth, they prevent their own goals from being achieved,” he continued.

Montebourg’s views echo those of Hollande himself during his election campaign two years ago.

Then he slammed German Chancellor Angela Merkel for insisting on austerity to bring down debt across the eurozone, saying: “Our Europe can be the lever and the solution unless it is condemned to the austerity that the incumbent (Nicolas Sarkozy) has chosen by teaming up with the German Chancellor.”

The French government approved a 50 billion euro savings plan in April – although Hollande, the most unpopular French president in living memory, insisted that it was not an all-out austerity programme.

Jan Techau, a director at Carnegie Europe, explained that Paris and Berlin remained the economic heart of Europe.

“Germany is always in the limelight, but France is equally important because it is the duo of the two and the stability and strength of the two that basically the entire construction of Europe rests on. If France crumbles and falters and becomes an even, you know, more economically destabilised place that will bode unwell, and catastrophic perhaps even, for all of Europe,” Techau told euronews.

Merkel has made it clear that Germany will continue to push for fiscal austerity across Europe.