France gets ahead of deficit targets

30th March 2012, Comments 0 comments

France beat its public deficit target for 2011 with a figure of 5.2 percent of output, official data showed on Friday, and the government immediately lowered its target for 2012.

The 2011 deficit figure, lower than the 5.7 percent forecast in the budget, was issued by the INSEE statistics office.

The state of France's public finances is a key issue in a presidential election campaign which is in its final weeks.

The deficit, which includes state and social services spending such as the public health system, was 7.1 percent of gross domestic product in 2010 and the 12-month drop is the biggest fall on record.

French President Nicolas Sarkozy, in the midst of campaigning for re-election, told Europe 1 radio that this means "that the commitments I made, if the French give me their trust, to be at three percent (of GDP) in 2012 will be held and zero percent in 2016."

The French public debt however continued to expand in 2011, hitting 85.8 percent of gross domestic product, higher than the 84.9 percent forecast, INSEE said.

The French government immediately lowered its deficit target for 2012 to 4.4 percent of GDP, from 4.5 percent.

Budget Minister Valerie Pecresse, in announcing the new target, took a swipe at opposition Socialists saying that Sarkozy, if re-elected for the right-of-centre UMP party, would call a referendum if local constituencies resisted budget cuts.

Socialists, whose candidate Francois Hollande is tipped to beat Sarkozy in a two-round election, dominate French regional government.

The UMP says these administrations have ramped up spending on employing staff in the last decade but the regions say they have been lumbered with extra expenses under decentralisation.

EU nations, such as France, are supposed to keep their public deficits at under 3.0 percent of GDP and their public debt at under 60 percent.

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© 2012 AFP

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