France will cut deficit, says Finance Minister

PARIS, March 2 (AFP) – France will meet its eurozone public deficit targets this year and next, holding the shortfall to less than three percent of gross domestic product, Finance Minister Thierry Breton said here Wednesday.

“I am at ease in saying that … next year in 2006 we will be below three percent,” he told an interviewer on France 2 television.

Shortly after his remarks, the finance ministry said Breton had also wanted to talk of reducing the deficit in 2005.

The deficit came to 3.7 percent of output last year after 4.2 percent in 2003, according to the national statistics institute INSEE.

As member of the 12-nation eurozone France is bound to hold the deficit to three percent or less of gross domestic product.

Earlier, Breton told parliament he would be “immovable” regarding public spending in order to galvanise the national economy, now struggling with a public debt that has grown to more than EUR 1 trillion.

In his first address to lawmakers since being named finance minister on Friday, Breton said he would be “immovable on public spending to make more room for manoeuvre for employment, for consumer purchasing power, for growth (and) for innovation.”

“I want – with all my colleagues in government and all my ministerial staff – to help France recover its confidence,” the finance minister said.

“There is not a second to lose.”

Breton spoke after data showed the French public debt had grown to almost EUR 1.066 trillion (USD 1.4 trillion) in 2004, pushing the ratio of debt to output up to 65.6 percent, well above an EU limit of 60 percent.

The minister drew howls of complaint from opposition lawmakers by claiming the debt was a heritage left by previous Socialist-led governments.

In 1980, the debt amounted to “EUR 90 billion for the state. This year EUR 1.066 trillion. That is our inheritance,” said Breton, who left a lucrative job as head of the French telecommunications operator France Telecom to take on the ministerial post.

In the slightly more than two years that he ran France Telecom, Breton put in place policies aimed at slashing the operator’s record debt of EUR 70 billion in half.

Returning to the theme of getting France back on track, Breton said: “Confidence is also a question of having clear parameters. “I commit myself to giving you these parameters, to being held accountable … with regard to improving employment, along with my colleague Jean-Louis Borloo,” the minister of employment and social cohesion.

On Friday, figures showed that the French jobless rate had jumped to its highest level in five years, at 10 percent of the workforce.