France's Hollande urges euro zone growth effort

French President Francois Hollande appealed on Wednesday for more efforts to boost growth across the euro zone, warning ahead of a European Union summit that recession was as big a threat as budget deficits.      

Hollande told the daily Le Monde that troubled euro zone states should have the leeway to stimulate internal demand with salary rises and tax cuts, adding that a longer-term goal must be to reduce the big differences in borrowing costs in the bloc.            

"If we don't breathe some life into Europe's economy, budget discipline measures won't work," Hollande was quoted as saying ahead of a two-day Brussels summit due to discuss plans for stabilizing the bloc's debt troubles.           

Hollande has challenged Germany's focus on strict austerity measures since he came to power in May. The International Monetary Fund weighed in this month, saying Greece, Portugal and Spain should be given more time to cut their public deficits.            

France's Socialist leader also wants the euro zone to move towards mutualized debt at a later stage in the form of jointly issued euro bonds - something Germany opposes at least until budget stragglers can get their public finances into shape.          

"The goal, too, is to harmonize interest rates in the euro zone," Hollande said, noting it was unsustainable to have some states borrowing at 1 percent interest and others at 7 percent.           

"Budgetary union must be completed with a partial mutualization of debt, through euro bonds," he said.

REUTERS