Wednesday 23 January 2019

French deficit below 3pc of GDP for first time in decade

French President Emmanuel Macron. Photo: Reuters
French President Emmanuel Macron. Photo: Reuters

Michel Rose

France's public deficit shrank to a better-than-expected 2.6pc of gross domestic product in 2017 - the first time it has fallen below the EU's 3pc limit in a decade, the national statistics office has said.

The result, better than the government's 2.9pc, will be good news for President Emmanuel Macron, who made respecting EU budget rules after years of delays a cornerstone of his aim to restore French fiscal credibility among EU peers.

Shortly after he was elected last May, Mr Macron took belt-tightening measures, including cuts to a popular housing allowance, to make sure the budget deficit would not overshoot the 3pc limit, which cost him popularity rating points.

However, figures from the INSEE statistics office showed the better-than-expected improvement in France's public finances was also in a large part due to stronger tax receipts, boosted by brisker economic growth.

The French tax burden rose to a record of 45.4pc of GDP in 2017 from 44.6pc the year before. Government spending rose by 2.5pc and government revenue by 4pc.

France was also one of only two eurozone nations still under the European Commission's excessive-deficit procedure, with only Spain expected to have done worse in 2017, according to Commission forecasts.

The improvement should give welcome support to Macron's quest to convince Germany, the EU's paymaster, to reform the eurozone and help overcome mistrust between northern European countries and what they perceive as profligate southern members. (Reuters)

Irish Independent

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