France’s Hollande seeks €120bn ‘growth pact’ [Telegraph]

France has sent European leaders a proposal for a €120bn (£97bn) “growth pact” including a financial transaction tax that it wants Europe to introduce “by the end of the year”, it was reported yesterday.

The “leveraged” cash is to come from a combination of short-term growth instruments such as project bonds, reallocated EU structural funds and fresh investment capital from the European Investment Bank.

But some European diplomats have already reacted scathingly to the plan, suggesting only a fraction – about €10bn – would be “new money” designed to make the proposal an easy-to-agree “victory” for new French president Francois Hollande.

Mr Hollande submitted his ideas to EU partners and the European Council a few days ago ahead of a Group of 20 summit in Mexico today and tomorrow. Most of Mr Hollande’s proposals for the €120bn will be in a “compact for growth and jobs” to be agreed by EU leaders at a Brussels summit on June 28.

According to Le Journal du Dimanche, which obtained the report, the €120bn would come from three sources. Some €10bn would be in new European Investment Bank cash, which Mr Hollande estimates will allow the EU to leverage €60bn in private investment on international markets.

But many in Brussels are deeply sceptical about the maths. “No one has ever explained how €10bn becomes €60bn. This is funny money and risks politicising an institution that works well because it is independent of the politicians and the dodgy euro maths that has fuelled the crisis,” said one senior EU diplomat.

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