France tells Germany it will slash deficit

Associated Press Modified: November 15, 2012 at 12:46 pm •  Published: November 15, 2012
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BERLIN (AP) — France's prime minister assured Germany on Thursday that his country is committed to getting its debt under control, amid concerns that the second-largest economy in the eurozone is weakening.

During his first visit to Berlin since taking office in May, Jean-Marc Ayrault sought to dispel fears that Germany's most important ally in fighting Europe's debt crisis could itself be heading for trouble just as the French government has to slash spending to reduce its deficit.

France wants to "stop burdening future generations with continuously rising debt and restore the necessary leeway for political actions," Ayrault told a gathering of German business leaders. He stressed that "we are aware that getting the public finances in order is also the precondition for our sovereignty."

Eurozone members Greece, Ireland and Portugal have all had to accept painful austerity demands in return for bailouts from the bloc's richer nations.

According to official figures published Thursday, France narrowly dodged recession in the third quarter. Its economy expanded 0.2 percent in the July-September period from the previous quarter — as did that of Germany, where growth is slowing.

President Francois Hollande's Socialist government last week announced measures to rein in government spending, lower labor costs to strengthen the country's competitiveness and reduce the deficit, largely by raising taxes.

"I wholeheartedly wish success to what is being set in motion in France now," German Chancellor Angela Merkel said following talks with Ayrault.

"Our goal is to return to growth," Ayrault maintained.

Still, France has watched unemployment tick steadily up as a raft of companies announced layoffs in recent months. The jobless rate now stands at 10.8 percent, according to European statistics.

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