France still upbeat about growth, deficit goals

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France still upbeat about growth, deficit goals

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France has unveiled its proposed budget for next year. President Nicolas Sarozy’s conservative government has stuck with previous targets for growth, debt and the deficit.

It forecasts economic growth of 1.75 percent this year and next despite growing concern about the economic outlook.

It also hopes to cut the public deficit to 4.5 percent of gross domestic product next year from 5.7 percent in 2011.

“We have sound reasons to think it can be achieved,” Finance Minister Francois Baroin told journalists. “We will not deviate from our (deficit reduction) path,” he added.

But the government admitted that only “a dissipation of current turbulence will allow us to reach 1.75 percent growth in 2012”. That leaves the door open for a further revision downward.

For the first time, Paris also undertook to bring the deficit down to 1.0 percent in 2015 as it seeks to put public finances in order.

However, France’s total, accumulated debt will be higher than previously expected, largely because of the country’s contribution to rescue funds for bailed-out euro zone countries such as Greece, Portugal and Ireland.

Already expected to reach a record 85.5 percent of GDP this year, accumulated debt will hit 87.4 percent in 2012, half a percentage point higher than the previous estimate.

The budget bill will be debated in parliament in the days ahead but is not expected to meet with major opposition.