March 28, 2024

Bundesbank President Says France Needs to Control Its Deficit

FRANKFURT — The head of the German central bank said Monday that France should not give up trying to bring its government deficit below 3 percent of gross domestic product, adding to the criticism being heaped on President François Hollande of France from abroad.

Jens Weidmann, president of the Bundesbank, cloaked his rebuke in the language of French-German solidarity and was considerably more diplomatic than Maurice M. Taylor Jr., the head of the American tire maker Titan International, who sparked a furor last week when he told the French industry minister that French workers were lazy.

Still, Mr. Weidmann was the latest prominent person to lecture the increasingly defensive French on how they should manage their economy.

Speaking in Paris at the École des Hautes Études Commerciales, a leading business school, Mr. Weidmann noted that unemployment in France was above 10 percent while France’s share of world exports had declined by 25 percent since the euro made its debut. Total government debt “has reached a level that could potentially hurt growth,” Mr. Weidmann said.

France would undermine confidence in its prospects if it delayed efforts to control deficit spending, he said.

“Putting consolidation off would just shift the problem into the future,” Mr. Weidmann said, according to an advanced text of his remarks. “It would buy time but in so doing also worsen matters today as there is the risk that trust in public finances would erode even more.”

The tone of Mr. Weidmann’s speech was polite and even included a joke at Germany’s expense. (“How many Germans do you need to change a light bulb? One: he holds the light bulb, and the rest of Europe revolves around him.”)

Mr. Weidmann invoked the durable, if sometimes contentious, relationship between France and Germany, which has always been crucial to the functioning of the European Union. “Only together can France and Germany solve the current crisis,” he said.

But he said that the largest countries in the European monetary union had a responsibility to set an example for other members. “It is in my view particularly important for the heavyweights in E.M.U. to give clear signals,” he said.

France’s government budget deficit will be 3.7 percent of gross domestic product this year, while Germany will have a slight surplus, the European Commission forecast last week. When European countries formed a common currency, they agreed to keep their deficits below 3 percent of G.D.P., though the target has often been breached.

Mr. Weidmann acknowledged that budget austerity might hurt growth but said countries had no choice. “It is important that governments adhere to the consolidation plans they announced,” he said. “This will inspire confidence, which is an important prerequisite for the economy to grow.”

He rejected suggestions by Christine Lagarde, president of the International Monetary Fund and the former economics minister of France, that Germany should somehow become less competitive to give other countries a chance.

“The deficit countries must act,” Mr. Weidmann said. “They must address their structural weaknesses. They must become more competitive, and they must increase their exports.”

Article source: http://www.nytimes.com/2013/02/26/business/global/bundesbank-president-says-france-needs-to-control-its-deficit.html?partner=rss&emc=rss

Japan Plans Safety Assessments of Nuclear Plants

TOKYO — Japan will conduct new safety assessments of its nuclear plants, the nation’s top energy official said Wednesday, in a move that could delay the restarting of the nation’s idled nuclear reactors by weeks or months.

The official, Trade and Industry Minister Banri Kaieda, said the so-called stress tests would measure the plants’ ability to withstand larger-than-expected earthquakes and tsunamis, like those that disabled the Fukushima Daiichi plant in March.

He said the analyses, modeled on those conducted by the European Union on its plants, were intended to give “a sense of assurance” to local residents. While Japanese officials have disclosed few details of the tests, local newspaper reports speculated that they could take months.

The issue of local acceptance has come to the forefront as Tokyo tries to persuade regional leaders to allow the restart of dozens of reactors that were originally idled for regular maintenance but have not been turned on since the March disaster.

On Wednesday, the governor of southern Saga Prefecture, who will be the first to make the decision, said he would await the results of the new assessments before deciding whether to allow the Genkai nuclear plant’s two reactors to be restarted.

Thirty-five of Japan’s 54 reactors are offline, some for earthquake-related damage but most for routine repairs. Under Japanese law, reactors must shut down for repairs every 13 months.

Experts warn that if no reactors are turned back on, every reactor in Japan will be idle by April, possibly leading to power shortages.

However, the Fukushima accident has created a popular backlash against nuclear power. As a result, Tokyo faces an uphill battle to persuade regional leaders to give the necessary approval to restart their local reactors.

The Saga governor, Yasushi Furukawa, has said he wants to meet with Prime Minister Naoto Kan to hear an explanation about the nation’s energy policy and why the reactors must be restarted. In Parliament on Wednesday, Mr. Kan refused to say whether he would meet with Mr. Furukawa.

Article source: http://www.nytimes.com/2011/07/07/world/asia/07japan.html?partner=rss&emc=rss

French Automakers to Pay Off Government Loans Early

PARIS — In another sign of improving health at the large French automakers, the government said Thursday that PSA Peugeot Citroën and Renault would repay ahead of schedule the billions of euros in state loans provided during the financial crisis.

Éric Besson, the French industry minister, told France Info radio that the remainder of the €6 billion, or $8.7 billion, would be repaid “in the next few days,” which was “faster than anticipated.”

The decision, he said, showed that “confidence has returned” to the sector.

In 2009, amid plummeting sales and the prospect of large-scale layoffs, the French government announced that it would loan Peugeot and Renault €3 billion each over five years at 6 percent interest. Renault Trucks, now owned by Volvo, also received some aid.

In conjunction, the automakers introduced part-time work arrangements and curbed production at some plants.

But since then, the health of the two companies has slowly improved, helped initially by government incentives — now expired — for new car buyers, which lifted sales in Europe. Sales also were robust in emerging markets like Russia, Brazil and China.

A report this week from the European Automobile Manufacturers’ Association, or A.C.E.A., showed new passenger car unit sales in the European Union fell 5 percent from a year earlier in March. Sales in Germany and France both grew, but they were weaker in Britain, Italy and Spain.

The two French companies have followed the same repayment rhythm, returning a first tranche of €1 billion in the second half of 2010, then a further €1 billion in February with the final €1 billion due to be repaid on Tuesday.

This week Peugeot, the No. 2 automaker by volume in Europe behind Volkswagen, said that its sales grew 10.2 percent in the first quarter to €15.4 billion. Peugeot reduced its net debt last year by €2 billion to €1.2 billion.

In the first quarter, its sales grew 76 percent in Russia, 12.8 percent in China, and 10 percent in Latin America. That helped to offset a slight drop in European sales and the effect of supply chain problems in Japan following the earthquake and tsunami last month.

Peugeot shares have climbed 2.7 percent so far this year.

Renault, in which the government has a 15 percent stake, has lagged its domestic rival.

Its shares have fallen 11.7 percent this year. The company is recovering from an embarrassing scandal during which it accused employees of espionage, dismissed them and then offered to reinstate them when an investigation by prosecutors failed to support the allegations.

Alongside its partner, Nissan Motor of Japan, Renault has bet heavily on electric vehicles and is hoping to recoup in coming years the billions that its has invested in battery-powered models.

Renault will publish its first-quarter results Tuesday.

Article source: http://www.nytimes.com/2011/04/23/business/global/23auto.html?partner=rss&emc=rss