France sees wider-than-expected deficits in coming years

The ministry said in a statement that it has revised its forecasts regarding the country's public deficit for 2017, 2018 and 2019.

France sees wider-than-expected deficits in coming years

World Bulletin / News Desk

France's public finances will be deeper in the red than initially anticipated in the next few years, due to slower growth and increased government spending, the finance ministry said on Wednesday.

It was now expected to amount to 2.8 percent of overall output this year, instead of the 2.7 percent initially anticipated, the statement said.

Similarly, the deficit ratio was set to come out at 2.3 percent in 2018 and 1.6 percent in 2019, rather than 1.9 percent and 1.2 percent as first forecast.

Under European Union rules, eurozone countries are not allowed to run up deficits in excess of 3.0 percent of gross domestic product (GDP) and must aim to balance their public finances in the medium term. 

Originally, the government had been hoping to bring down its deficit ratio more rapidly and reach 1.3 percent by 2020.

To help monitor their progress, member states are obliged to submit their updated economic and budget forecasts to Brussels every year. 

France's deficit ratio has been in breach of the 3.0-percent ceiling for years now and stood at 3.4 percent in 2016. 

Nevertheless, "the deficit will fall back below 3.0 percent of GDP, enabling France to exit the excessive deficit procedure it has found itself in since 2009," the ministry insisted. 

The slight deterioration in France's public finances was due to a lower-than-expected growth of 1.1 percent last year, instead of 1.5 percent, as well as increased government spending related to changes in the country's unemployment benefit laws, the ministry explained.

At the same time, the finance ministry said it was sticking to its forecast for economic growth of 1.5 percent this year. 

But it downgraded its forecasts for 2018 and 2019 to 1.5 percent and 1.6 respectively.

It had originally been pencilling in growth of 1.75 percent and 1.9 percent for next year and the year after.

Güncelleme Tarihi: 12 Nisan 2017, 12:28