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Budget

France seeks more time to reduce budget deficit

France’s newly reshuffled government is seeking a review of an EU timetable for cutting its budget deficit. Paris wants more time to rebalance its public finances and faces failure to meet an EU target for a second time.

France was seeking to find a path of common interest on deficit reduction with the EU Commission, including a review of the pace of rebalancing its public finances, Finance Minister Michel Sapin said Thursday.

Speaking in an interview with Radio France Inter, Sapin - who became new finance minister in a recent French cabinet reshuffle - said that France would stick with the EU's overall goal of bringing the deficit down to 3 percent of gross domestic product (GDP). However, the path and the timing would have to be discussed with the EU Commission.

“Europe will be better off when France is better off,” he said, adding that there was a thin line between budgetary rigor and an excess of austerity that would choke France's economic recovery.

Official figures released on Monday showed the French budget shortfall amounted to 4.3 percent of GDP last year, slightly higher than the 4.1 percent originally planned.

Three percent goal

Fiscal plans for this year and next year, which Paris is asked to present to the EU Commission by the end of the month, are likely to show, however, that the government will miss the 3-percent goal again this year and next year. In 2013, France already won a two-year grace period from the EU to bring its deficit under control by 2015.

In a reference to German calls for deficit reduction, Sapin also said that it was not up to one country to tell others what do, and added: “We must together share the only important concern: more growth for more jobs, while gradually rebalancing out public finances”.

France's urgent need for economic reform

The French economy, which is Europe's second largest after that of Germany, has been suffering stagnant growth and rising unemployment in recent year.

Socialist president Francois Hollande is finding it hard to impose spending cuts and tax increases needed to rein in the deficit.

A dismal showing by his Socialists in local elections last Sunday, prompted a government reshuffle under the more hardline Prime Minister Manuel Valls, who is likely to make France's stance on deficit reduction more defiant in upcoming talks with Brussels.

uhe/ipj (Reuters, AFP, dpa)

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