French National Debt Rose to Record 95.1% of GDP

France’s national debt rose to a record 95.1 percent of annualized economic output in the second quarter, data showed on Tuesday, underlining the country’s struggle to rein in its public finances a day before the 2015 budget is presented.

In the second quarter, the national debt topped two trillion euros for the first time as it rose to 95.1 percent of GDP from 94.0 percent in the first quarter, according to the official statistics agency INSEE’s figures.

The news follows the latest evidence of the sacrifices necessary to get France’s finances in order. Late on Monday the government announced plans to cut health spending and pare family benefits.

 
The Socialist government will cut social security spending by 9.5 billion euros ($12.05 billion) next year, officials said, in an attempt to rein in a welfare system deficit that is set to come in at a bigger-than-expected 11.7 billion euros in 2014.

That means the welfare and health systems make up nearly half the 21 billion euros in overall budget savings the government aims to make in its 2015 budget.

The government is looking to wring 3.2 billion euros from health spending alone, a tough pill to swallow in country that prizes its generous public health system.

A further 700 million euros in savings will be squeezed out of the budget for family benefits, which economists say has encouraged higher birth rate than many other European countries.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza