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Published On: Mon, Aug 25th, 2014

French Economy Minister calls for policies, alternative to German austerity, to support household consumption

France’s Economy Minister proposed a divergence from German austerity toward growth-oriented policy, in order for household consumption to revive.

France’s Economy Minister proposed a divergence from German austerity toward growth-oriented policy, in order for household consumption to revive.

Arnaud Montebourg, France’s Economy Minister said France should not go along with the persistent austerity push asserted by Germany. It should rather promote alternative policies to support household consumption.

Montebourg shared his views at a socialists’ meeting in the east of France. He pointed out that the deficitreduction measures,implemented since the financial crisis set in 2008, had severely crippled European economies. That is why, in his opinion, governments have to quickly change policies or see their voters going over to populist or extremist parties.

The French Economy Minister said that France, having the second largest euro zone economy, does not wish to conform to the excessive austerity policies of German conservatives. Worldwide consensus is emerging uniting economists and politicians on the need for adopting growth-oriented policies.

In addition, Montebourg quoted former French president Charles de Gaulle and former Britain’s PM Margaret Thatcher,who also spoke in favor of changing EU policies.

The French official said he had asked French President Hollande for a major reorientation of the country’s economic policy, with the focus less on debt reduction at the expense of additional support for household consumption.

Arnaud Montebourg is open about his presidential ambitions and is known for frequently attacking austerity. It is thought his latest comments will embarrass President Hollande, who is reluctant to change his policy toward spending cuts and breaking corporate taxes, despite the building pressure.

Hollande’s policies are geared toward business, and left-wing members and voters are increasingly dissatisfied with his inability to curb unemployment despite his pledge to do so. As a result, approval of Hollande is rapidly declining, currently reaching 17 percent, to make him the least popular president in over half a century.

There was no comment on Montebourg’s words from Hollande’s office, but a source near PM Manuel Valls’s office indicated his statements went too far, and the PM intended to take action.

Montebourg warned that stringent austerity measures were hampering growth. He said that six years after the unleashing of the global economic crisis, the US and Britain have resumed growth, while stagnation or even shrinking are the words characterizing the state of the euro zone.

According to the French Economy Minister, the conditions in the euro zone are specific, so austerity in fiscal and monetary aspects would not only halt the crisis but would deepen and extend it instead. He urged for a different direction to put economic destruction to an end.

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