French economy minister says austerity measures sapping growth

Sat Aug 23, 2014 8:39am EDT
 
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By Alexandria Sage

PARIS (Reuters) - Austerity measures being pursued by France and elsewhere in the euro zone are quashing growth, French Economy Minister Arnaud Montebourg was quoted saying on Saturday, renewing his attacks on policies he sees as negative for the economy.

Montebourg's interview with Le Monde daily came days after President Francois Hollande said he would accelerate reforms but not back away from his supply-side economic policy, based on bigger tax cuts for business.

The outspoken minister, a fierce critic of budget austerity, is known for frequent attacks on big business and the European Commission, which he accuses of strangling economic recovery with its prioritization of deficit reduction.

"We have to give priority to getting out of the (economic) crisis and relegate to second place the dogmatic reduction of deficits, which is driving us to austerity and a continued rise in unemployment," Montebourg said.

Without specifically taking on Hollande, he said he did not exclude France from his criticism.

"Today, forced deficit reduction is an economic aberration because it aggravates unemployment; a financial absurdity because it makes stabilizing public accounts impossible; and a political disaster because it throws Europeans into the arms of extremist parties who want to destroy Europe," Montebourg added.

He pointed a finger at Germany, saying the euro zone's largest economy was "trapped by the austerity policy she has imposed on all of Europe."

While not as strident as the comments by Montebourg, French Finance Minister Michel Sapin similarly argued for moderated deficit reduction in an interview published in Italian newspaper La Repubblica.   Continued...

 
French Economy Minister Arnaud Montebourg delivers a speech during a conference about the economic recovery of France at the Bercy ministry in Paris July 10, 2014.   REUTERS/Charles Platiau