France pledge on public deficit cut

Government promises to hit Brussels-imposed 3% public deficit ceiling next year

23 April 2014

THE FRENCH government has pledged to reduce its public spending deficit to the Brussels-imposed limit of 3% of GDP in 2015.

It had previously said that the deficit would be cut next year to 2.8%.

The "softer" target, revealed yesterday as part of a new package of fiscal reforms for the next three years of François Hollande’s presidency, will be presented to Brussels for approval next month.

Europe's second-biggest economy has the highest public spending quota in the EU. The government has twice been given more time by the European Commission to meet the 3% deficit ceiling.

New finance minister Michel Sapin said yesterday the deficit would fall to 2.2% of GDP by 2016 and to 1.3% by 2017 – against a previous forecast of 1.7% and 1.2%.

Growth would be 1% next year, rising to 2.25% in 2016 and 2017, he said.

Mr Sapin described the programme as “coherent” and “responsible”. He also said that the economy is being hit by the “too high” euro exchange rate.

But some have already questioned the government’s figures. The high council of public finances, a group of public-sector auditors and private-sector economists, said the outlook, “contains several weaknesses and is subject to various risks”.

The government is also hoping that its controversial “Responsibility Pact”, which aims to cut public spending by €50bn, will boost private investment and create up to 200,000 jobs.

Details of the “Pact” were revealed by Prime Minister Manuel Valls earlier this month, but it is unpopular with voters.

Yesterday, as the fiscal reforms were unveiled, President Hollande was booed by angry locals during a visit to Carmaux, and a banner saying "No to austerity" was draped over a statue of the founding father of French socialism, Jean Jaurès.

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