France to revise growth forecast
France will announce a revised growth forecast Wednesday, the government said, as many economists warned it would be unable to meet the previous goal of two percent over the year.
Prime Minister Francois Fillon was due to announce a raft of austerity measures later in the day to reassure markets that France is tackling its budget deficit and head off threats to its credit rating.
Budget Minister Valerie Pecresse confirmed beforehand that the new budget would be based on a revised growth figure -- she did not say which way the figure would shift, but all the signs were that it would go down.
The government had initially based its spending plans on expected growth of two percent in 2011 and 2.25 percent in 2012, as the economy slowly stumbles back to life following the recession that followed the 2008 credit crunch.
For many experts that goal was already too ambitious, then in the second quarter GDP growth dropped to zero after a expanding 0.9 percent in the first.
Eurozone powerhouse Germany has also begun to slow down, posting only 0.1 percent, and President Nicolas Sarkozy's government has been scrambling to defend his policies in front of sceptical markets.
Fear the eurozone member states are overburdened with sovereign debt has destabilised the single currency and forced the richer economies to bail out banks and struggling neighbours.
But threats of debt ratings downgrades have forced governments to make cutbacks even as the broader economy is struggling to pick up speed, with some observers warning the slowdown could trigger a new recession.
© 2011 AFP