In a dramatic revision of key economic figures, the French government has cut its growth prediction for 2014. As a result, Paris has also admitted that the public deficit will soar past the limit agreed with the EU.
The French economy was expected to grow 0.9 percent in 2014, which was substantially less than the previously forecast 1.2 percent, France's Finance Minister Pierre Moscovici said Wednesday.
Speaking to reporters in Paris, Moscovici also said the country's public deficit would be higher than expected, surging to 4.1 percent this year and 3.6 percent in 2014.
Originally, Socialist President Francois Hollande promised to rein in the budget shortfall from an expected 3.7 percent this year to 2.9 percent next year under an EU debt reduction plan. The agreement gave France until 2015 to cut its deficit below the EU limit of 3 percent of gross domestic product. The plan is now increasingly doubtful.
Moscovici said, however, that the population would be spared further tax hikes apart from a limited sales tax increase that had been announced already. Instead, the government is favoring spending cuts to plug the deficit, envisaging an unprecedented 15 billion euros ($20 billion) in savings for 2014, he added.
The revised outlook came as the French economy rebounded from a brief recession in the second quarter after recording zero growth last year. Moscovici left the government's growth outlook for this year unchanged at 0.1 percent, encouraged by renewed expansion of 0.5 percent between April and June.
uhe/mz (dpa, AFP)