Van Rompuy: French Deficit Respite Tied to Reform

A decision by the European Commission to give France two more years to meet its deficit target of three percent will not come "for free", EU President Herman Van Rompuy said on Tuesday.

"The decision is not (formally) taken, neither by the commission nor by the council," he told reporters at a press conference in Stockholm.

The Commission on Friday offered France extra time after its spring forecasts painted a pessimistic picture of the French economy over the next two years.

Asked about French Finance Minister Pierre Moscovici's remarks on Sunday that the move marked the end of the union's "austerity dogma", Van Rompuy struck a cautious note.

"It's not for free. It's the result of past performances, and if this postponement is decided it will be related to further structural reforms in the future," he said, citing the labour market as an example.

France will widely miss its commitment to meet the EU's ceiling for the deficit of 3.0 percent of ouput, and will post a 3.9-percent deficit this year and 4.2 percent shortfall next year.

Paris said on Saturday it would not relax efforts to reduce public debt even with a two-year extension.

"There is no question of easing the effort to reduce spending," Finance Minister Pierre Moscovici told AFP.

The EU president also described the euro-zone as being "in that most difficult of moments where it's after the violent storm but before the clear sky."

"The existential threat to the euro is behind us. Public deficits across Europe have been reduced by more than half since 2008 and competitiveness is improving in several countries, also in the southern part," he said.

"The bad news is that the economic crisis is dragging out longer than anticipated. And worse, the number of people in search of jobs has not yet started to fall."