Asmussen urges "concrete" steps from France on deficit

(Reuters) - European Central Bank board member Joerg Asmussen urged France to take "concrete and measurable" steps to bring down its budget deficit, saying Paris faced a test of its credibility and must come as close as possible to its 3 percent goal for this year.

Speaking to Reuters on Friday after the European Commission forecast that France's deficit would come in at 3.7 percent of gross domestic product (GDP) in 2013, well short of target, Asmussen said the country had a special responsibility, along with Germany, for fiscal stability in the euro zone.

"If the Commission now forecasts that France will miss its target this year, then I think it's a matter of credibility that France takes appropriate steps as quickly as possible to correct this missing target, so that it can come as close as possible to the target for this year," Asmussen said.

He said the French government should take "concrete and measurable" measures to accomplish this by agreeing structural reforms with trade unions that address the country's loss of competitiveness.

His comments reflect growing concern in Europe, and more specifically Germany, about the economic divide that has opened up between the euro zone's two biggest economies, and the readiness of French President Francois Hollande to take tough measures to close the gap.

Earlier on Friday, Michael Fuchs, a senior lawmaker in Chancellor Angela Merkel's conservative party, referred to France as a "problem child" that was badly trailing its partners on economic reform.

Asmussen was speaking ahead of a Reuters summit on the euro zone being held next week in capitals across Europe. Top policymakers will be discussing hot-button issues like a Cyprus aid package, Italian elections, banking regulation and the future shape of the currency bloc.

BIGGEST THREAT

Asmussen, a German native who served as deputy finance minister in Berlin during the global financial crisis, said the ECB had done what it could for the euro zone, calling its current policy stance accommodative and appropriate.

He said the biggest threat to the bloc was governments being lulled into complacency by financial markets, which have calmed in recent months, in large part due to the ECB's promise last year to buy unlimited amounts of euro zone sovereign bonds under strict conditions.

"The biggest risk in my view this year is simply non-action, that governments and also European institutions may become complacent because the market pressure has abated a bit," Asmussen said.

He said the bloc still faced a number of challenges, including getting to grips with a loss of competitiveness in some countries, laying out a medium-term fiscal strategy and addressing weak bank balance sheets.

"It is up to governments to do this," he said, saying monetary policy could not address all problems.

He predicted a "very gradual recovery" in the euro zone economy this year and said strong business climate data from the Munich-based Ifo institute published on Friday suggested first quarter gross domestic product (GDP) in Germany would be "significantly better" than the fourth.

(Reporting by Axel Threlfall in London, Reinhard Becker, Stephen Brown, Matthias Baehr, Annika Breidthardt and Noah Barkin in Berlin)