France must "considerably" boost efforts to tackle deficit

28th January 2008, Comments 0 comments

European Commission will next week call on France to "considerably" accelerate efforts to reduce its public deficit

  BRUSSELS, January 25, 2008  - The European Commission will next week call
on France to "considerably" accelerate efforts to reduce its public deficit,
including making "crucial" structural reforms, according to a report obtained
by AFP.
   Last year, eurozone members set themselves the goal of balancing their
budgets by 2010 at the latest.
   However, after being elected French President last year, Nicolas Sarkozy
asked his eurozone partners to push back the goal until 2012 if economic
growth were not sufficiently strong.
   "France is invited to considerably strengthen the pace of budgetary
consolidation and the debt reduction," the EU's executive arm says in a
recommendation to be delivered to Paris next Wednesday.
   The Commission opines that while a balanced French budget is more likely in
2012 than 2010, "even this adjustment path is subject to important risks".
   France should take measures "so as to ensure a safety margin against
breaching the three percent deficit threshold is attained, preferably already
in 2008." 
   Deficits of up to three percent of gross domestic product (GDP) have been
tolerated under the European Stability Pact.
   In its "stability programme" delivered to the European Commision last
month, France predicted a deficit of 2.3 percent of GDP this year and 1.7
percent next year.
   Last year's figure stood at 2.6 percent, up from 2.4 percent in 2006.
   "Structural reforms will be crucial to increase potential growth, improve
competitiveness and sustain the budgetary consolidation process," the
Commission says in its memorandum.
   That would permit a reduction in public spending, which currently stands at
a whopping 53 percent of GDP.

AFP 

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