French parliament backs EU budget discipline treaty

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Published October 09, 2012

| Reuters

France's lower house of parliament voted to ratify a European budget discipline treaty on Tuesday as most left-wing lawmakers got behind Socialist President Francois Hollande on a law seen as key to restoring euro zone stability.

A law ratifying the fiscal pact was passed by 477 votes in favor to 70 against, despite a small but noisy revolt from left-wingers and Greens that threatened to embarrass Hollande just before an October 18-19 European Union summit.

In all, 45 among the 314 lawmakers that make up Hollande's left-wing parliamentary coalition either voted against the law or abstained, ignoring pleas from Prime Minister Jean-Marc Ayrault in recent days to fall into line.

Yet Hollande still rallied 282 left-wing votes in favor, above the 274 required for a majority and sparing him from having to rely on votes from opposition conservatives, who voted largely in favor of ratification.

"This sweeping majority will give France a bigger voice, that is to say it will enable us to forge ahead with the rebuilding of Europe that I have committed to since my election," Hollande said after the result.

When former president Nicolas Sarkozy signed up to it in March, the Socialists had opposed the fiscal pact, which holds governments to meet deficit-cutting goals or face sanctions.

Plagued by painful memories of failing to rally his party behind a 2005 referendum on an EU constitution, Hollande persuaded his EU partners at his first summit in June to sweeten the pact with accompanying measures to stimulate growth in Europe.

As recalcitrant left-wingers continued to revolt against the pact this month, Ayrault told them voting against it meant putting the euro's future in danger.

Still, 20 out of the 264 Socialist Party deputies in the lower house voted against the law on Tuesday, along with 12 Greens. Among opposition parties, 13 radical leftists voted against and 17 conservatives.

SHACKLES

Hollande is anxious to show that his party will stand united behind him on steps agreed in June to deepen fiscal and economic integration in Europe, steps opponents on the left view as handing too much control of national affairs to EU authorities.

"We salute the no vote of a number of Socialist and Green deputies who, like us, reject the shackles this austerity treaty imposes on the people of Europe," said Andre Chassaigne, leader of far-left lawmakers in the National Assembly.

"It will lead our country, like other EU states, towards the abyss of recession," he said.

Hollande is treading a fine line as he tries to convince his EU partners, and investors from London to Beijing, that he is serious about bringing down the public deficit while also battling to restore jobs and growth to a stalled economy.

Since his May election Hollande's approval ratings have fallen from 55 percent to as low as 41 percent, the fastest drop of any recent president, as unemployment has surged to a 13-year high above 10 percent.

Tuesday's vote came as riot police used teargas to disperse protesters during nationwide demonstrations over mounting job losses and a wave of industrial layoffs.

Hollande's economic credibility is being put to the test by the jobs crisis and by a 2013 budget that hinges on an economic growth target of 0.8 percent that many view as over-optimistic.

The International Monetary Fund joined skeptical economists on Monday and halved its growth forecast for France to 0.4 percent next year. Finance Minister Pierre Moscovici responded by calling the government's outlook "realistic".

The president has promised the European Union he will cut the deficit to 3 percent of gross domestic product in 2013, but the gloomier growth outlook and his decision to make two-thirds of the adjustment through tax rises has raised doubts.

The fiscal pact enters into force on January 1 next year or when 12 of the 17 euro zone member countries ratify it, as half a dozen, including Germany, already have.

The ratification law passes to the Senate on Wednesday and should be finally adopted before the end of the week.

(Reporting By Emile Picy; Writing by Catherine Bremer; Editing by Paul Taylor and Will Waterman)

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