French statistics body sees 1.6 percent 2010 growth

30th September 2010, Comments 0 comments

The French economy is set for growth in 2010 of 1.6 percent, higher than the government's budget forecast, the statistics office INSEE said on Thursday.

The 2011 budget presented on Wednesday put this year's growth at 1.5 percent, followed by 2.0 percent in 2011 and then 2.5 percent from 2012 to 2014.

In June, INSEE had estimated growth this year as France pulls out of recession at 1.4 percent.

On Thursday, Budget Minister Francois Baroin said, however, that "in fact, we'll have 1.6 percent (growth)."

The growth rate is critical as it determines in turn forecasts for spending and revenues at a time when France, like many of its European peers, is struggling to put its strained public finances in order.

The budget on Wednesday was presented as the biggest change in public finance policy for 50 years since radical economic reforms under General De Gaulle.

The budget laid out tough action to reduce spending and raise taxes.

The finance ministry said separately on Thursday that France's total public debt rose to 82.9 percent of gross domestic product at the end of the second quarter and would likely be at that level, the equivalent of 1.59 trillion euros, for the full year.

The government expects total debt to rise to 86.2 percent in 2011 and 87.4 percent in 2012 before falling back to 85.3 percent in 2014.

European and eurozone rules say that total state debt should not exceed 60 percent of GDP in any one year, with the annual public deficit ceiling set at 3.0 percent.

The rules are intended to ensure that member countries work towards a surplus in times of growth and that any surplus should be used mainly to reduce historic debt.

INSEE also said that the rate of unemployment in France would be steady at 9.6 percent at the end of the year.

© 2010 AFP

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