France has 'no time to lose' in adopting reforms: EU

(BRUSSELS) - France has "no time to lose" in enacting reforms with the nomination of a new government following a row over economic policy, the EU Commission said on Wednesday.

It is crucial that France's new government "maintain its reform commitments, which are essential for France to sustainably relaunch growth and employment," said Simon O'Connor, spokesman for Economic Affairs Commissioner Jyrki Katainen, at a news conference.

French President Francois Hollande reshuffled his government on Monday after the then Economy Minister Arnaud Montebourg strongly denounced France's adoption of EU-backed austerity policies which he said were mandated by Chancellor Angela Merkel in Germany.

The firebrand Montebourg has been replaced by the pro-reform Emmanuel Macron, a 36-year-old former investment banker whose nomination has angered the French left, but is welcomed on financial markets.

France has already indicated that it will again struggle to meet the EU's strict deficit requirements, rules that Montebourg blamed for France's inability to achieve growth and create jobs.

O'Connor said the priority for France "was the respect of structural reform commitments. There is no time to lose," he said.

Analysts on financial markets say that investors are taking the view that France remains committed to reforms to help businesses and to reduce public spending.

But France has already warned Brussels that it will overshoot this year's agreed deficit target of 3.8 percent of output, dashing all hope that the country will fall under the official EU ceiling of 3.0 percent by 2015 as promised.

During the eurozone debt crisis, the Commission gained new powers of oversight over national budgets, with the ability to sanction countries which break limits on public spending.

After losing his job, Montebourg said the rules created a "financial absurdity" and called for "another path for Europe" that did not privilege balanced budgets over growth.

France's economy has registered zero growth in the first six months of the year and the government has been forced to halve its full-year forecast to 0.5 percent, amid high unemployment.

"The fact that the economy is today slower in Europe and in France does not mean that we should give up" on reforms, Hollande said in an interview last week.

"On the contrary, we need to go faster and further."