France will meet deficit target
Budget minister is confident that the country will meet its target of 2.5 percent of GDP without increasing taxes.5 May 2008
PARIS - France will meet its target of a public sector deficit of 2.5 percent of gross domestic product in 2008 without raising taxes despite pressures on the economy, Budget Minister Eric Woerth promised Sunday.
"During 2008, we should be able to keep to our aim of a 2.5 percent public deficit," he said during a public debate, warning however of the need for caution on spending.
"The country's coffers are always empty and we have a EUR 50 billion deficit," he noted.
To achieve a balanced budget by 2012 as France has promised its European Union partners, EUR 10 billion would have to be saved annually from both state and social security spending, the minister warned.
Spending by local communities would have to be reduced, and the government was also counting on increased revenue from future economic growth.
Promising that there would be no income tax increases, the minister warned that economic growth was weaker than forecast because of the current international climate.
But France was weathering the storm better than the United States, he said.
France has revised downwards its growth forecast to take account of the latest financial situation: Forecast growth for 2008 is 1.7 percent to two percent with a deficit of 2.5 percent of gross domestic product, and for 2009 growth is forecast of 1.75 to 2.25 percent with the deficit reduced to two percent.
The European Union's executive Commission has forecast more modest growth for France for 2008 of1.6 percent with an increase in the GDP deficit to 2.9 percent, followed in 2009 by 1.4 percent growth and a three percent deficit, the maximum tolerated by the EU.
[AFP / Expatica]