French duo set Elysée and EU in their sights

The two leading candidates in the French presidential race have set out their visions for the future of Europe, both calling on the EU to do more to boost economic growth and job creation.

Favoured Socialist candidate Ségolene Royal gave her fullest exposition of her views on how the Union must evolve in an interview with Le Figaro last week (22 June), calling for the current constitution to be replaced with a "social treaty" which would balance the EU's economic pillar. "Without a second social pillar, nothing is possible," she warned. Endorsing the increasingly popular approach of a "Europe of results" (Europe par la preuve), she said that Europe needed to "prove its capacity to protect", to "combat mass unemployment and to "represent a brighter future". This could be achieved by social and tax harmonisation and more common projects such as the creation of industrial champions, research programmes and social and managerial best practices.

Royal also criticised the EU's Stability and Growth Pact, saying the Union needed to "unscrew the budgetary yoke" so that investment for the future should not be included in the calculation of deficits, reprising an old suggestion of President Jacques Chirac.

From the right, Nicolas Sarkozy, president of the UMP party, also attacked the pact in a speech in Agen.

On the same day that Royal's interview appeared in Le Figaro, Sarkozy said that he accepted that membership of the eurozone required "common budgetary discipline" to reduce deficits when the economy was strong. But he said that it also meant refusing the "absurd logic" of "increasing taxes, cutting public investment and trimming social expenditure when growth slows down and unemployment increases".

Sarkozy, a former finance minister, also implicitly criticised the European Central Bank's (ECB) current path of gradual interest rate rises. Being a "consistent European", he said, meant telling the ECB that there were "risks in pursuing a policy of monetary tightening when activity was stagnating". What was needed was "genuine economic governance in the eurozone" and a discussion on the statute and objectives of the ECB, a reference to the fact that the bank only targets inflation and not levels of employment as the Federal Reserve Bank does in the US.

Sarkozy stressed his credentials as a supporter of the EU, the euro and the constitution. But, he insisted, the euro had been created not to "strangle" Europe but to allow it to tackle the challenge of globalisation. The euro had been launched thanks to "lots of sacrifices", he said, referring to years of slow growth in France to prepare public finances. But those sacrifices had been made to allow Europe to act, not to stand passively by, he said.

Sarkozy's speech and Royal's comments come in the wake of an undignified exchange between ECB President Jean-Claude Trichet and Jean-Claude Juncker, the Eurogroup chairman, over whether there is a need for the Eurogroup, the eurozone finance ministers, and the bank to co-operate more closely. European politicians have called for the bank to act cautiously in considering further rate rises, fearing that increases could choke off inflation. Sarkozy's speech reflects a desire on both sides of French political lines for greater political influence over monetary policy as well as a need for greater economic policy co-ordination among members of the Eurogroup (and member states outside the eurozone).

But the EU has already carried out a difficult reform of the Stability Pact rules in 2005 after they proved difficult to enforce in the face of resistance from France and Germany. Attempts at more political control of the ECB will founder on the bank's insistence on independence in order to ensure credibility. While calls for greater economic co-ordination are fine in theory, they always seem to fall down in practice. The failure of member states to resist pressure to cut fuel taxes in response to sudden price hikes is one example of where rhetoric fails to match reality.

With the French presidential elections less than a year away, both Royal and Sarkozy's speeches are perfect examples of campaign language designed to appeal to their respective constituencies. But both, whether in terms of ambition for a more social treaty or a reform of the EU's monetary policy set-up, look like being quietly forgotten when either contender moves into the splendour of the Elysée Palace.

The two leading candidates in the French presidential race have set out their visions for the future of Europe, both calling on the EU to do more to boost economic growth and job creation.

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