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France warns of deepening public deficit

France 'doesn't rule out' requisitions for war production

France’s public sector deficit for 2023 will be worse than forecast, a government minister said on Thursday, citing a global economic slowdown as the main factor for the slippage.

The deficit is now expected to be in excess of five percent of gross domestic product (GDP), Thomas Cazenave, minister for public accounts, told broadcaster Franceinfo.

This compares to the official government deficit estimate of 4.9 percent of GDP.

Cazenave cited an economic slowdown in China and Europe, and the Ukraine war as reasons, saying these factors had created “a new situation” for France.

While acknowledging that the deficit figure would now be “in excess of five percent” Cazenave declined to confirm recent press reports that the government actually expects a deficit of 5.6 percent.

The minister’s remarks come a day after President Emmanuel Macron summoned members of his government to the Elysee Palace to discuss France’s finances.

Like all eurozone members, France is committed to keeping its deficit to below three percent of GDP.

That requirement, agreed between European Union members as part of their Stability and Growth Pact, has been suspended since 2020 first to allow countries to deal with the Covid pandemic, and then with the economic fallout of Russia’s invasion of Ukraine.

Macron has promised to bring French finances back on track within the next four years but forecasts for economic growth, crucial for deficit cuts, have been disappointing.

Finance Minister Bruno Lemaire last month cut the government’s forecast for growth to 1.0 percent for this year from a previous 1.4 percent projection.

France has announced 10 billion euros ($10.8 billion) of spending cuts this year to limit the fallout.

The cuts would help the government meet its deficit target for this year of 4.4 percent of GDP, Le Maire has said, but experts say this may now also have to be revised.

The government has said it hopes to bring its deficit to below 3.0 percent of GDP in 2027.

Statistics institute INSEE is scheduled to report on the 2023 national accounts on Tuesday.

 

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AFP

Agence France-Presse (AFP) is a French international news agency headquartered in Paris, France. Founded in 1835 as Havas, it is the world's oldest news agency.







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