Merkel Ally Warns Against 'Wrong Signal' To France On Deficit

[April 09, 2014]  BERLIN (Reuters) — One of Chancellor Angela Merkel's chief allies in parliament on Wednesday criticised the center-left candidate for European Commission president, Germany's Martin Schulz, for saying France should get more time to cut its public deficit.

Schulz, the European Parliament president from the Social Democrats (SPD), has said he would back a renegotiation of France's 2015 deadline for bringing its deficit in line with an EU limit of 3 percent.

The SPD shares power with Merkel's conservatives but is aligned with France's ruling Socialist party.

Volker Kauder, the floor leader of Merkel's conservatives in the Bundestag lower parliamentary house, said in a debate that it was "high time that everyone understood that we must uphold the rules that we have adopted as law".

Kauder said Schulz, who is competing with conservative Jean-Claude Juncker of Luxembourg to be the next head of the European Union's executive body, was "being rather lax with such rules and laws. That is the wrong signal for France."

"Every false signal to France about not having to stick to the rules will be noticed in Greece and elsewhere," Kauder said.

France has a history of not keeping deficit promises and the prospect of a further delay, on top of last year's postponement, could annoy Merkel, who championed a "fiscal pact" across most of the European Union to stick to common budgetary rules.

French Finance Minister Michel Sapin met his German counterpart Wolfgang Schaeuble in Berlin on Monday to discuss the financing plans of the new cabinet in Paris let by Manuel Valls, who unveiled his plans for tax and public spending cuts on Tuesday.

Germany might find it difficult to show further flexibility to France when it has insisted on tough fiscal reforms in euro zone states like Greece, where unions holding an anti-austerity strike on Wednesday ahead of a visit to Athens by Merkel scheduled for Friday.

(Reporting by Stephen Brown; editing by John Stonestreet)

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