France improves on deficit target as EU patience wears thin

14th January 2016, Comments 0 comments

France said on Thursday it managed to reduce its budget deficit by more than forecast in 2015, just as the EU warned it was taking a harder line on the French shortfall.

Last year's deficit came in at 70 billion euros ($76 billion), four billion less than forecast which, Finance Minister Michel Sapin told Europe 1 radio, takes it to levels last seen before the financial crisis.

"The government budget will see its deficit drop by much more than we expected. We expected a deficit of 74 billion... and what we will have is a 70 billion government deficit," he said.

"This is the figure that France had in 2008, that is to say before the budgetary crisis. From that perspective, we are emerging from the crisis," Sapin said.

The announcement came as EU Economic Affairs Commissioner Pierre Moscovici warned Paris that it could expect no more leniency from Brussels on keeping a promise to reduce its public deficit to below three percent of gross domestic product (GDP) by 2017, as required by eurozone rules.

"If France makes a sufficient structural effort, it can obviously go below three percent in 2017. It has been granted a delay of two years twice. This will not be extended again," Moscovici said in remarks published by four European newspapers on Thursday.

"Respecting this target is therefore an important question of credibility," he said.

France has committed to reducing its deficit to 3.3 percent of GDP this year, and below three percent next year.

"We will make it. We will do what it takes to get there," Sapin said.

France is officially targeting a 2.7-percent deficit next year, which is at odds with an EU estimate for France of 3.3 percent.

Paris's current estimate for the 2015 deficit is 3.8 percent, based on the original 74-billion-euro shortfall expectation. Sapin did not say how the improved deficit figure would affect the deficit-to-GDP ratio.

In the wake of November's terror attacks in Paris, President Francois Hollande warned that financing his country's security was more important than meeting the EU's deficit criteria.

© 2016 AFP

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