PARIS, Sept 14 (Reuters) - France should see this year its best growth rates since 2011, the OECD said on Thursday, revising up its outlook in its first in-depth look at the French economy since Emmanuel Macron became president.
While looking on Macron's reform agenda with a largely favourable eye, the Organisation for Economic Co-operation and Development (OECD) said it had to be anchored with a long-term plan to cut public spending, the highest in the 35-nation club.
After growth of only 1.1 percent last year, the French economy is set to grow 1.7 percent this year, its highest rate since 2011 but still lagging the euro zone average, the OECD forecast in a 150-page report on the French economy.
Growth would ease marginally next year to 1.6 percent, the Paris-based OECD said, as it nevertheless revised up its forecasts from previous estimates in June for growth of 1.3 percent in 2017 and 1.5 percent in 2018.
In order to reduce debt and afford labour tax cuts boosting long-term growth, France needed to tackle its chronically strained finances with gradual cuts in public spending, currently at more than 56 percent of economic output, it added.
France was seen making little headway reducing its public sector deficit, which the OECD estimated would fall from 3.0 percent of output this year to 2.9 percent next year. The French government itself is targeting 2.7 percent for 2018.
President Emmanuel Macron plans to cut spending next year by 20 billion euros ($23.8 billion), but much of the savings will be offset by tax cuts and increased spending in priority areas such as education.
The OECD urged Macron's government to focus on reducing pension expenditure over time as a percent of output and on cutting the public sector wage bill, especially by merging local government bodies.
France has the lowest average age for workers leaving the labour market among OECD countries, and the OECD recommended in particular gradually raising the minimum retirement age from 62 years currently.
Macron had originally not planned to lift the retirement age in a planned overhaul of the system next year, but increasing strains on its finances may leave him little choice.
($1 = 0.8416 euros) (Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta)