EU says outcome of French reforms uncertain, more needed
By Jan Strupczewski
BRUSSELS (Reuters) - France's efforts to improve its competitiveness and reduce its public debt may not be effective and it needs to press ahead with further reforms, the European Commission said in a report on Thursday.
The report reviews progress made by Paris to tackle its economic imbalances under a European Union procedure to prevent problems in some sectors of an EU country's economy from becoming a full blown crisis that affects the whole bloc.
It adds to the reform pressure that France already faces to avoid being fined by EU finance ministers for badly missing its budget consolidation targets in 2014 and 2015 under a separate budget discipline procedure.
Paris has until early March 2015 to show it did all it could to meet its earlier reform commitments.
The Commission said last March that France's problems were weak external competitiveness, as the country's export market share fell 13 percent over five years, and high public debt that is to reach 100 percent of gross domestic product in 2016.
"In some policy areas reforms are progressing, but there remains uncertainty on their expected outcomes and their effectiveness," the Commission said in Thursday's report.
"Therefore, continued decisive implementation and, where appropriate, adaptation remain necessary but also further reform efforts are needed," it said.
France introduced a tax rebate for competitiveness and employment in 2014 and cut social security contributions for 2015, but the Commission was not impressed.
"Overall, the impact of these labour cost reductions is uncertain, especially in terms of the size and timing of the impact on competitiveness but also as regards their effect on employment," it said.
"For a number of reforms, it is premature to assess progress made so far, as the exact content of the measures is still under consideration or in the process of adoption, implying that outcomes remain uncertain," it said.
France was to bring its budget deficit below 3 percent of GDP in 2015 under an already extended deadline set by EU ministers, but its draft 2015 budget delays that to 2017.
"Little has been done to improve the long-term sustainability of public finances and efforts are in particular needed to improve the sustainability of the healthcare system," the Commission said.
"Also, progress on the simplification of the taxation system in the 2015 Draft Budget Law is limited," it said, added: "Additional structural measures are needed to ensure the financial sustainability of the unemployment benefit system."
(Reporting By Jan Strupczewski; editing by Philip Blenkinsop)
