President Francois Hollande is going
all out to show he’s serious about putting France’s house in
order.

Faced with growing impatience in other European capitals at
his failure to shrink France’s budget deficit, his plan to kick-start the economy is arriving early. Economy Minister Emmanuel Macron presented the proposals today, more than a month before
he submits it to the cabinet and three months before it will be
sent to parliament. The presentation came on the day France has
to formally send its 2015 budget plans for consideration by the
European Commission in Brussels.

France’s failure to comply with deficit rules it helped
write is drawing the ire of countries such as the Netherlands
and Austria, which are calling on Hollande to act. The proposals
range from easing Sunday shopping restrictions to speeding the
settlement of disputes between companies and employees.

“The fact that Macron’s law won’t reach parliament before
January is proof that the two are linked,” said Bruno Cavalier,
chief economist at Oddo Securities in Paris. “Hollande needs
this to help the Europeans swallow the budget pill.”

At a meeting of the euro zone’s finance ministers in
Luxembourg this week, France’s plea for patience on the budget
deficit got a frosty reception.

“Based on the numbers we’ve heard up to now, the gap
between what should be achieved based on the rules and the
budget that’s expected is very big,” Dutch Finance Minister
Jeroen Dijsselbloem told reporters before the meeting. “With
all respect for France, this gap must be reduced.”

Widening Deficit

France sees the deficit rising to 4.4 percent of gross
domestic product this year — the first increase in five years –
– and barely improving to 4.3 percent in 2015. The shortfall
won’t shrink to the EU limit of 3 percent of GDP before 2017.
That’s two years later than the extended deadline set down by
the Commission.

“The rules of the game should be the same for everyone —
France has a very special responsibility here,” Austria’s
Finance Minister Hans Joerg Schelling said. “Just like Austria,
all the other countries have to do their homework.”

Euro-area countries including France must submit their
budget to the EU this week. Using powers bolstered at the height
of the debt crisis, the commission, the EU’s executive wing, can
force France to revise the plan if it deems it to show
insufficient progress in shrinking its deficit.

Countries that have kept to the rules “justifiably are
demanding that the same measures be enforced in the larger
countries,” Bundesbank President Jens Weidmann said yesterday
in a speech in Bielefeld, Germany.

Credibility Question

“If the rules were to be stretched once more to their
maximum, that would massively weigh on their credibility,” he
said. “We should not forget that the sovereign debt crisis
began when financial markets withdrew their trust in the
sustainability of nations’ debt.”

The bloc’s finance ministers must also endorse each other’s
budgets before the end of the year, which may create a standoff
between the nations that demand sticking rigidly to spending
cuts and those — such as France and Italy — that want to spend
more to boost the economy.

Sapin is pleading for understanding at a time when growth
in the euro zone is falling and inflation is a fraction of the
European Central Bank’s target of close-to but below 2 percent.

“Maybe sometimes we can go faster,” Sapin said before the
Luxembourg meeting. “But right now, in this period, with growth
that’s half the pace of what was expected, with inflation that’s
collapsed, we cannot cut our deficits at the same pace.”

No Link

Macron denied a link between the budget procedure and the
reforms, while adding that France needs to make changes in its
own interest.

“The budget debate has nothing to do with reforms, there
is no oil-for-food swap here,” Macron said. “If we’re adult
enough, if we’re determined enough to carry out reforms that are
good for us, no one will be giving us lessons. It’s up to us to
draw the conclusions for ourselves.”

Even so, France needs to make a gesture to its partners if
it is to receive support for its current plan, Cavalier said.

“The other countries are legitimately annoyed,” he said.
“They have no illusions. They know that trying to cut to 3
percent would be brutal and have a huge impact on the economy.
But what’s being proposed now, a 0.1 percentage-point reduction,
is just not enough. France needs to make a gesture,” he said.

To contact the reporters on this story:
Mark Deen in Luxembourg at
markdeen@bloomberg.net;
Helene Fouquet in Paris at
hfouquet1@bloomberg.net

To contact the editors responsible for this story:
Fergal O’Brien at
fobrien@bloomberg.net
Vidya Root, Steve Rhinds