Business World

Thursday 21 March 2019

French economy worse than thought

French President Francois Hollande
French President Francois Hollande
French President Francois Hollande

Leigh Thomas

France cut its public sector deficit less quickly than planned last year, missing the government's target and presenting a new setback for President Francois Hollande.

Figures released yesterday also showed that the eurozone's second-biggest economy grew in the last quarter of 2013 largely because consumers pinched by rising taxes tapped their savings to finance spending.

Voters frustrated with a rising tax burden and Mr Hollande's broken promises to turn around the economy punished his Socialist Party in a local election at the weekend.

National statistics office INSEE said the public deficit fell to 4.3pc of gross domestic product in 2013 from 4.9pc the previous year.

That meant Mr Hollande's government missed a deficit target of 4.1pc, which it had promised EU partners it would meet.

The worse-than-expected result means the government will have to make extra efforts this year to respect its pledge to bring its deficit in line with the European Union's limit of 3pc of GDP next year.

Any request for more time to meet the limit would be likely to go down badly with the European Commission, which has already granted Paris two extra years.

Weak economic activity weighed on tax receipts, while spending was in line with the budget, Finance Minister Pierre Moscovici said in a statement.

Gross public debt rose last year to a record 93.5pc of GDP from 90.6pc in 2012, also slightly missing the government's target of 93.4pc. (Reuters)

Irish Independent

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