France cuts forecasts for growth, budget shortfalls
France cut its forecast for growth next year to 0.9 percent on Wednesday and said its public deficit would fall more slowly than previously expected as a result.
Presenting headline figures for the 2014 budget, Finance Minister Pierre Moscovici said the government now targets a deficit of 4.1 percent of national output this year, up from an earlier forecast of 3.7 percent, and 3.6 percent next year, up from an initially projected 2.9 percent.
In what Prime Minister Jean-Marc Ayrault described as the "battle for growth", spending curbs of 15 billion will make up the bulk of the total 18 billion euros in deficit reduction, with the remainder from higher taxes.
The 2014 growth forecast, revised from the 1.2 percent it predicted in April, brought the government's projections more in line with those of the European Commission and the bulk of independent economists.
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The new numbers confirm France will use an extra two years slack granted by the EU to rein in the public sector deficit to below 3 percent of output in return for commitments to economic reforms.
The growth forecast for 2013 remains a feeble 0.1 percent as the euro zone's second-largest economy recovers from six months of recession that began in the last quarter of 2012.
The 2014 budget bill will be officially presented in full on Sept. 25.
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