The French central bank waded into troubled and highly controversial waters on Tuesday, urging the government to cut spending and avoid raising taxes further. The head of the central bank, Christian Noyer, issued his admonishment in a letter a day before the European Commission states its view of the performance and outlook for reforms of EU economies.
The Commission is widely expected to press France to do more, and quickly, to restructure its public finances and economy. France, together with Germany, is one of the two main pillars of the eurozone. Noyer, who also sits on the monetary policy council at the European Central Bank, urged the government to set about cutting the number of people with public-sector, civil servant status, and he defended the line taken by EU bodies demanding radical action to correct public finances.
In a letter to President Hollande and to the presidents of the Senate and the National Assembly, Noyer declared: "To achieve the announced targets, it is now necessary to concentrate efforts on public spending, given the high level of tax pressure attained and the impossibility of increasing charges on businesses without worsening activity and employment further."
Noyer said he expected growth of the French economy to be "close to zero" this year. The ECB, together with the Commission and the International Monetary Fund, forms the "Troika" of auditors which ensures that those countries which have received bailout help apply radical reforms in order to qualify for each slice of funding. France is not among the countries rescued and is able to borrow at exceptionally low interest rates, but there is concern, notably in Germany, about the pace of reform in France.