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France Leaves Budget Effort for Later With Growth Narrowing Deficit



France raised its growth outlook and forecast the budget deficit will narrow more quickly through 2022 as the economic recovery buoys public finances.

Gross domestic product wants to expand by 2 percent this year and 1.9 percent in 2019, more than the September projection of 1.7 percent for both years, the finance ministry said Tuesday. The budget deficit is expected to shrink to 2.3 percent this year compared to a previous projection of 2.6 percent.

Looking Up

France forecasts the budget deficit will narrow more quickly

Source: Finance Ministry


"Today's growth is back, but to-day's potential difficulties, we must make savings now," budget minister Gerald Darmanin told Le Figaro newspaper, adding that "difficult."

With President Emmanuel Macron is delaying the major effort to be in the budget shortfall until the second half of his five-year term. In 2021 and 2022, the ministry said it would cut its spending by just 0.1 percent of GDP this year and by 0.5 percent.

The International Monetary Fund said in September that France wants

The so-called "stability program" and its forecasts will be presented to the Cabinet Wednesday, debated in Parliament later this month and submitted to the European Commission by the end of April. The finance ministry says the program is the only way out of the EU.

France and Spain are only two euro zone members still facing heightened budget controls.

Bank of France Governor Francois Villeroy de Galhau on Monday called on Macron to tackle government spending.

"For the same level of performance, the cost of French government services is significantly higher than in neighboring euro region countries, "he said.

The French economy is currently running faster than its long-term potential and will slow next year unless Macron makes more structural changes to boost its performance, Villeroy

Read more: UBS Sees Euro Area's Brightest Growth Outlook in Ireland, France

Government debt will peak at 96.4 percent of GDP this year, falling to 89.2 percent by 2022, the government said. 97.1 percent in 2019 and 91.4 percent in 2022. Germany's public-debt burden is 64.8 percent of GDP and the European Commission forecasts it will drop to 57.9 percent next year.

"Debt is a poison for France's economy "Finance Minister Bruno Le Maire told Le Figaro. "It weakens our growth and impoverishes the French."

– With assistance by Angeline Benoit


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