EU keeps close eye on French deficit

26th September 2007, Comments 0 comments

26 September 2007, BRUSSELS (AFP) - The European Commission said Wednesday it was keeping a close eye on French public finances to avoid "slippage," after President Nicolas Sarkozy's government unveiled its first budget.

26 September 2007

BRUSSELS (AFP) - The European Commission said Wednesday it was keeping a close eye on French public finances to avoid "slippage," after President Nicolas Sarkozy's government unveiled its first budget.

EU Monetary Affairs Commissioner Joaquin Almunia is in "regular contact" with the French government on the issue, his spokeswoman told reporters in Brussels.  

"The surveillance of French public finances and those of other Union countries, in particular those which have not achieved the balance that is  called for, is necessary to stop slippage," said spokeswoman Amelia Torres.

She said it was too early to comment on the 2008 national budget presented  by the French government on Wednesday, which foresees only a marginal reduction in the budget deficit, from 2.4 percent of GDP this year to 2.3 percent next year.

France has long been one of the remedial students in the European school of fiscal discipline.

The European Commission's medium-term goal, meaning by 2010, is for totally balanced budgets.

"We think that this is a wise objective," said Torres.

Eurozone finance ministers committed in April to balance their budgets by 2010, but French President Nicolas Sarkozy warned them in July that France might take until 2012 while he carried out economic reforms.

French Prime Minister Francois Fillon caused a stir last week when he said the nation was "in a situation of bankruptcy" after decades of accumulated budget deficits and called for a change in mindset.

Earlier this month Almunia warned France said that "peer pressure" would increase on France if it did not make sufficient effort to address the problem.

"We cannot guarantee the success of reforms without fiscal consolidation," he said then.

AFP

Subject: French news

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