OLD AND IN THE WAY:

France heads for clash with EU over spending (Robert Graham and Francesco Guerrera, March 6 2003, Financial Times)

France was on Thursday night heading for a showdown with its European Union partners over its refusal to reduce spending and alter its tax policy despite its rapidly-deteriorating finances. [...]

Francis Mer, finance minister, was due to tell the Eurogroup, which preceded Friday's Ecofin meeting of the EU's 15 finance ministers, that France will breach the stability and growth pact, the economic rules underpinning the euro.

Mr Mer was expected to take a hard line with other EU ministers despite being set to unveil a 2003 budget deficit of 3.4 per cent of GDP, above the 3 per cent ceiling set by the pact. The breach will trigger automatic action against France from the European Commission.

France is also likely to breach the pact's limit for 2002 after it emerged that Eurostat, the EU statistics office, could adjust the country's budget deficit from the current 3.04 per cent to 3.1 per cent by including a state subsidy to the railways.

Backing for Mr Mer's tough stance came from President Jacques Chirac whose electoral pledges of increased public spending and tax cuts last year have increased the budget deficit.

Rage, rage against the dying of the light... Posted by Orrin Judd at March 7, 2003 1:30 PM