France says to take extra year to meet EU deficit target

PARIS (Reuters) - France will not bring its public deficit in line with an EU-limit until 2015 instead of next year as planned so far, Finance Minister Pierre Moscovici said on Tuesday.

With tax revenues weak so far this year, the government had been widely expected to take an extra year to cut its deficit to 3 percent of economic output. The European Commission in May already gave France a two-year reprieve on what was initially a 2013 target in return for commitment to structural reforms.

"The European Commission gave France two years to get under 3 percent of GDP and we are going to use those two years," Moscovici told Reuters at a conference.

The government had targeted a deficit this year of 3.7 percent of gross domestic product (GDP) and had initially aimed to bring it down to 2.9 percent in 2014.

The European Commission sees little chance that the 3-percent target can be reached next year and has said France can take until 2015 in order to avoid too much budget tightening and strangling a nascent recovery.

The government's fiscal targets have come under pressure this year with a weak tax take while spending remains high after Europe's second-biggest economy suffered a short, shallow recession at the start of the year.

President Francois Hollande's government will update its deficit targets and growth forecasts in its 2014 budget when it is presented on September 25.

"The public deficit will be slightly higher than expected," Moscovici told French radio RMC, referring to 2013.

(Reporting by Leigh Thomas, John Irish and Jean-Baptiste Vey; editing by Mark John)

See all articles from Reuters

Friend's Activity