France to fail on budget deficit target - EU forecasts

Monday, May 05, 2014

European Commission estimates the Eurozone economy will fail to cut its overall budget deficit in line with the bloc's limit of 3 percent of GDP.

European Commission estimates the Eurozone economy will fail to cut its overall budget deficit in line with the bloc's limit of 3 percent of GDP.

ANKARA - The European Commission has warned France it will fail to cut its overall budget deficit to the European Union's limit of 3 percent of gross domestic product despite austerity measures by the French government.

The commission said it expected France to overshoot its target with a deficit of 3.4 percent in 2015.

However, France’s Finance Minister Michel Sapin said his country was "determined" to stay on the target following Monday’s release of the commission's forecasts.

According to the E.U. single currency criteria set out in the Treaty of Maastricht, member states’ national budget deficit must be at or below 3 percent of GDP.

Meanwhile, France, the second biggest economy in the E.U. after Germany, had a 4.3 percent deficit last year and 4.9 in 2012.

This is despite austerity measures taken by the government such as expenditure cuts worth 50 billion euros until 2017.

France’s Court of Auditors has warned many times in recent months that Paris must reform urgently to control its public finances. But the government, under the control of Socialist President Francois Hollande, faces domestic strains in making deeper cuts in spending to help businesses and reduce unemployment.

The French government has already won extra time from the European Commission until the end of 2015.

Meanwhile, it is expected that France’s public debt would be on track to reach $2.7 trillion, or 95 percent of GDP by the end of this year.

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