PARIS (MNI) – Germany’s stellar economic growth performance in the
second quarter is good news for France, French Budget Minister Francois
Baroin said in a radio interview Wednesday morning.

“It’s good news for Germany. It’s also good news for France. They
are our first partner,” Baroin told Europe 1 radio. Germany last week
reported a blistering second quarter GDP growth rate of 2.2% q/q, the
fastest quarterly rise since German unification two decades ago.

Baroin, who just completed a trip to Berlin on a mission to help
align Franco-German budget policies and reduce the competitiveness gap
between the EU’s two largest economies, noted the broad consensus in
Germany that crosses political lines in favor of debt and deficit
reduction. “In France, we still have some work to do on that,” he rued.

Germany is the envy of Europe in terms of fiscal policy, with a
deficit that is expected to be around 4.5% of GDP this year — far below
the EU average and below France’s 8% ratio. The German deficit is
projected to drop to 4% in 2011, while France’s is expected at 6%.

Baroin said that Germany is “an example, a model, and for me an
inspiration on certain points.”

Asked about the recent downgrade of the French government’s growth
forecast for 2011 from 2.5% to 2%, Baroin sought to portray it as an
opportunity on the budget front. “It pushes us to find another E3
billion” in savings, he noted.

He reiterated that E10 billion in savings would come from reducing
or eliminating certain tax deductions, which he characterized as gifts
from “Santa Claus.”

Baroin also reiterated that government operating expenses would be
frozen in nominal terms. But he said those who are the most socially
vulnerable would be spared. “We will not touch them,” Baroin said. “We
will try to do a budget that is as just as possible.”

He noted that the government must find E40 billion next year, with
priority given to spending reductions. Over the next three years, E100
billion must be cut, he said.

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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