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| France Won’t Meet Budget Deficit Target Until 2017, Government Warns | France Won’t Meet Budget Deficit Target Until 2017, Government Warns |
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| PARIS — France’s economic recovery will be much more fragile this year than originally thought, and the government will not be able to meet targets for reducing the deficit for at least another two years in the face of sputtering growth, the French Finance Ministry announced on Wednesday. | |
| That gloomy news was all the more significant coming on the same day that Pierre Moscovici, a former French finance minister, was nominated to a top economics oversight role in the European Commission. Mr. Moscovici is seen as representing a departure from the strict deficit-reduction discipline that the European Commission has subscribed to — and which France has blamed for stifling growth. | That gloomy news was all the more significant coming on the same day that Pierre Moscovici, a former French finance minister, was nominated to a top economics oversight role in the European Commission. Mr. Moscovici is seen as representing a departure from the strict deficit-reduction discipline that the European Commission has subscribed to — and which France has blamed for stifling growth. |
| The French economy will expand at a tepid 0.4 percent pace in 2014, well below the 1.7 percent rate the government forecast earlier this year, said Michel Sapin, the finance minister. The public deficit, he added, will remain at around 4.4 percent of gross domestic product, up from 4.2 percent last year. That is well above the 3.8 percent target that the government had been aiming for in an effort to gradually bring France’s finances into line with the eurozone’s fiscal rules. | |
| The forecast came as France stepped up a campaign to push against Europe-wide austerity policies that the government says have delayed a recovery from Europe’s long-running debt crisis — not only in France, but also across the 18-member eurozone. | The forecast came as France stepped up a campaign to push against Europe-wide austerity policies that the government says have delayed a recovery from Europe’s long-running debt crisis — not only in France, but also across the 18-member eurozone. |
| Mr. Sapin amplified that message on Wednesday, saying France would “not take measures that would exacerbate the slowdown in growth that we already know, and further add to a slowdown in inflation.” | Mr. Sapin amplified that message on Wednesday, saying France would “not take measures that would exacerbate the slowdown in growth that we already know, and further add to a slowdown in inflation.” |
| Mr. Moscovici’s nomination as commissioner for economic and financial affairs — an appointment that France lobbied heavily for him to receive — may elevate the argument for European governments to make growth a greater priority. Mr. Moscovici, a Socialist, would succeed Olli Rehn of Finland, who has been widely accused — Mr. Rehn would say unfairly — of being too focused on austerity budgets. | Mr. Moscovici’s nomination as commissioner for economic and financial affairs — an appointment that France lobbied heavily for him to receive — may elevate the argument for European governments to make growth a greater priority. Mr. Moscovici, a Socialist, would succeed Olli Rehn of Finland, who has been widely accused — Mr. Rehn would say unfairly — of being too focused on austerity budgets. |
| But Mr. Moscovici is no spendthrift. He has repeatedly urged the French government to stick to promises of fiscal rectitude and significant spending cuts to reduce the deficit. “There is no alternative policy when 57 percent of gross domestic product is devoted to public spending,” he said recently. | But Mr. Moscovici is no spendthrift. He has repeatedly urged the French government to stick to promises of fiscal rectitude and significant spending cuts to reduce the deficit. “There is no alternative policy when 57 percent of gross domestic product is devoted to public spending,” he said recently. |
| Mr. Sapin said on Wednesday that France would not ask for wholesale changes to European fiscal rules. “But we will take into account economic reality” as the government tries to improve France’s growth situation, he said. | |
| France has been lobbying the European Commission for greater leniency in meeting deficit reduction targets, even as it presses ahead with a platform, outlined by President François Hollande earlier in his term, to improve France’s finances through large spending cuts and tax increases. | France has been lobbying the European Commission for greater leniency in meeting deficit reduction targets, even as it presses ahead with a platform, outlined by President François Hollande earlier in his term, to improve France’s finances through large spending cuts and tax increases. |
| The deficit will not fall to the 3 percent limit required by eurozone rules until at least 2017, Mr. Sapin said. France has already pushed back the deadlines for meeting that target twice in the last three years — postponements that Mr. Rehn in Brussels had agreed to. | The deficit will not fall to the 3 percent limit required by eurozone rules until at least 2017, Mr. Sapin said. France has already pushed back the deadlines for meeting that target twice in the last three years — postponements that Mr. Rehn in Brussels had agreed to. |
| France says it will stick to its pledge to cut its government spending bill by 50 billion euros, or $65 billion, through 2017. But because the recovery is so weak, less than half that amount — €21 billion — will be cut starting next year. Mr. Sapin predicted growth would rebound to 1 percent in 2015. | France says it will stick to its pledge to cut its government spending bill by 50 billion euros, or $65 billion, through 2017. But because the recovery is so weak, less than half that amount — €21 billion — will be cut starting next year. Mr. Sapin predicted growth would rebound to 1 percent in 2015. |
| In the meantime, he warned, weak growth is also a factor in the economy’s worrisomely low inflation, which, as in many other parts of the eurozone, is seen at risk of lapsing into a downward spiral of deflation. | In the meantime, he warned, weak growth is also a factor in the economy’s worrisomely low inflation, which, as in many other parts of the eurozone, is seen at risk of lapsing into a downward spiral of deflation. |
| Inflation in France will end this year at an anemic rate, 0.5 percent, Mr. Sapin added, before picking up to a 0.9 percent pace in 2015. The government is bracing for a €2 billion tax shortfall this year because of the weak economy, but Mr. Sapin on Wednesday pledged there would be no new taxes any time soon. | Inflation in France will end this year at an anemic rate, 0.5 percent, Mr. Sapin added, before picking up to a 0.9 percent pace in 2015. The government is bracing for a €2 billion tax shortfall this year because of the weak economy, but Mr. Sapin on Wednesday pledged there would be no new taxes any time soon. |