France Cuts Deficit Forecasts and Growth Estimates

France will cut its public deficit slightly more than planned this year and next and bring it under the EU’s cap of 3 percent of GDP in 2017 as expected, government officials said on Wednesday.

While it hopes to do better thanks to a weak euro and oil prices as well as low debt interest rates, the government stuck to its 1 percent growth forecast for this year and trimmed it slightly to 1.5 percent for 2016 and 1.5 percent in 2017.

The government had said last month that it hoped to bring its budget deficit to around 3.8 percent of economic output in 2015, down from its previous 4.1 percent estimate.

It fine-tuned the estimate on Wednesday by saying it now targets a deficit of exactly 3.8 percent of GDP this year and 3.3 percent in 2016, down from its latest 3.6 percent target for that year.

The euro zone’s second-largest economy has exasperated many of its EU peers by repeatedly missing fiscal targets. It changed tack a few months ago by being more cautious in its forecasts.

The government did not say on Wednesday by how much France would cut its structural deficit, a key indicator for the European Commission’s assessment of its budget. That data will be unveiled next week, officials said.

Budget Minister Christian Eckert said on Tuesday that France would target a smaller reduction in its structural budget deficit in 2016 and 2017 than called for by the European Commission in order to preserve growth.
via CNBC

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