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09 August 2012

EUobserver: French court to decide on EU fiscal treaty


The Constitutional Court in Paris is to rule whether the treaty's provisions on keeping a balanced budget can be put in place using ordinary French law, or whether the French charter needs to be altered, as with the treaties of Maastricht, Amsterdam and Lisbon.

If the judges take the softer option, President François Hollande is expected to push the budgetary law through parliament in late September.  But if they take a hard line, the lower house and the upper house will have to convene a special joint meeting in October/November, delaying ratification of the treaty until December, or Hollande will have to call a referendum.

The budgetary law - which obliges countries to stick to a structural deficit of 0.5 per cent of GDP in normal circumstances - is at the heart of the new treaty.

Just five eurozone countries have ratified it so far - Cyprus, Greece, Ireland, Portugal and Slovenia. Austria, Italy and Germany have also completed parliamentary approval, but not the formalities of ratification, with Germany's constitutional court to rule on 12 September whether the treaty and the ESM are compatible with the German charter or not. Another five non-eurozone states - Denmark, Sweden, Latvia, Lithuania and Romania - have also ratified the text.

Amid increasing talk of a Spanish state bailout and a Greek euro exit, any French delay is likely to further unnerve markets.

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