France needs both reform and growth

French Finance Minister Pierre Moscovici insisted Tuesday that Paris remains committed to getting its finances in order, but said it would not do so at the expense of economic growth. "Of course, we must ensure that public finances recover," Moscovici said in a Berlin panel discussion with his German counterpart Wolfgang Schaeuble. "But we need to carry out this exercise carefully, taking into account national circumstances, and finding the right rhythm to preserve growth prospects." Speaking afterwards at a joint press conference with Schaeuble, the French minister said "we don't want to overshoot, we don't want austerity plans which go beyond what's necessary." Friction has arisen between the eurozone's two economic powerhouses recently as Berlin stresses the need for belt-tightening to make growth sustainable while Paris believes increased public spending can kick-start struggling eurozone economies. But Schaeuble insisted that portraying the matter as a clear-cut choice between austerity on the one hand and growth on the other was "a misunderstanding." "We have always said we want to work together for sustainable growth," he said. "For that, sound finances are a necessary condition." Moscovici rejected concerns that France would shy away from implementing reforms, saying that when it comes to reducing the structural deficit, "this promise will be kept." The European Commission has given France two more years to bring its deficit under the EU limit of three percent of gross domestic product. Schaeuble has voiced understanding for the move, provided that reforms continue. The German finance minister reiterated Tuesday that the extra time granted by the commission was "an appropriate response" and that "EU rules give us enough room for manoeuvre." The ministers were speaking to students at Berlin's Free University in the morning and then met with their country's central bankers, on the 25th anniversary of a Franco-German financial and economic council. Both ministers stressed that their countries are at the core of a united, interdependent Europe, but their meeting came as relations have soured between the centre-right government of Chancellor Angela Merkel and France's Socialist President Francoise Hollande. A leaked draft document from the French Socialist party recently attacked "austerity chancellor" Merkel for her "selfish intransigence" before the text was amended. Merkel's coalition partners, the Free Democrats, have meanwhile criticised the commission's move in giving France extra time to bring down its deficit. "The future of Europe depends on France sticking to the rules," the party's parliamentary leader Rainer Bruederle told business daily the Handelsblatt. Hollande has contested claims that he has put cooperation with Merkel on ice until after Germany's September general election and praised the chancellor, a German news weekly reported Sunday. The two governments in a joint statement Tuesday also said that "Germany and France agree that stability, competitiveness and growth within the economic and monetary union are crucial for the future of our two countries and the European Union. "They are essential conditions to ensuring that our European economic and social model can compete in a globalised world. Together we are committed to the single currency and are defending it," the statement said.