FRENCH PRIME minister François Fillon yesterday moved to end the increasingly bitter battle with London, following a series of declarations by influential French figures that the UK’s debt rating should be cut by ratings agencies.
Speaking during a visit to Rio de Janeiro in Brazil, Mr Fillon called deputy prime minister Nick Clegg to say he had not meant to question the UK’s rating, but rather to point out that the agencies seemed to be focusing too much on a country’s debt.
The war of words, partly prompted by chancellor of the exchequer George Osborne’s warning last month that “the markets are even asking about France”, intensified on Thursday after Mr Fillon and the French central bank governor, Christian Noyer, questioned the UK’s triple-A status.
French finance minister François Baroin went further yesterday, saying the “economic situation of Great Britain is very worrying today”, and “it is preferable to be French than British at the moment”.
Last night Mr Clegg’s spokesman said the deputy prime minister had accepted Mr Fillon’s explanation “but made the point that recent remarks from members of the French government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric”.
The fury from Paris was sparked in part by fears that France’s debt rating was about to be cut. Mr Fillon and Mr Clegg undertook to speak again shortly on economic co-operation.
Disclosure of the fact that the Fillon/Clegg telephone call took place is being seen as evidence of the greater role the Liberal Democrat deputy prime minister now intends to have on European Union matters, in the wake of last week’s summit.
Meanwhile, prime minister David Cameron yesterday spoke to German chancellor Angela Merkel and the Polish prime minister, Donald Tusk. Downing Street pointed out that the calls had been made to Mr Cameron.
“[They were] focusing on priorities for action, particularly the work to agree an intergovernmental agreement on fiscal stability, the role of the institutions, the forthcoming European Council which is focused on competitiveness and growth, and the need for further concrete action to restore market confidence in the euro zone,” said a spokeswoman.
Responding to the French comments, a Number 10 spokeswoman said: “In terms of our economic plan, we are very clear: we have a plan endorsed by numerous international organisations and the bond yields underline the credibility of the plan.”
Despite Mr Cameron’s decision to veto an EU-27 deal last week, the British have accepted an offer from the European Council secretariat to be involved in officials’ talks next week on the drafting of the intergovernmental treaty of the other 26.
Although the UK won’t have a vote on any final package by the 26 states, officials from the treasury and foreign office will “participate fully” in the talks on technical details of the fiscal agreement, Downing Street insisted.
The draft treaty also confirms that any major policy changes will need to be agreed by all 27 members of the European Union.
A copy of the draft treaty, seen by Reuters, says the deal will be adjudicated by the European Court of Justice, including a guarantee to keep debt below 60 per cent of GDP and budget deficits below 3 per cent – the same terms that were included, but not honoured, in the Stability and Growth Pact.
Eurosceptic Conservative MP Jacob Rees-Mogg illustrated the depth of feeling among Tory backbenchers about the EU when he said he “ultimately wants a renegotiation of the treaty”, adding that, in the end “Europe is more important than the coalition”.
However, fellow Eurosceptic Tory Douglas Carswell warned that the British government’s spending cuts were not “cutting debt”, and the economy was not growing. “Indeed, our debts are now increasing faster than our GDP. Sound familiar?” he posted on his blog.
“Like some of those euro zone countries, market distortions are allowing us to keep on borrowing long after it became imprudent to do so. In their case it was the fantasy that Greek, Spanish and Italian debt was the same thing as German and Finnish debt.
“In our case, it is the fantasy that this bond bubble will last,” he added.
