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France to cut spending in the face of weak growth


economy

France to cut spending in the face of weak growth

France is promising to further cut government spending.

After a cabinet meeting on Wednesday, Prime Minister Jean- Marc Ayrault said they will slash 15 billion euros next year to reduce the deficit.

The Finance Minister Pierre Moscovici said the budget would be a “catalyst for growth and competitiveness”.

That pledge came amid weak growth and rising unemployment.

The OECD’s latest estimate is that in September, the jobless rate in France edged up to 11.1 percent from 11 percent in August.

Moscovici was asked by euronews if the government can realistically expect the total to fall by the end of the year as they have predicted.

He replied: “Yes, always… First when you have layoffs, it doesn’t automatically mean that jobs are lost. Fortunately, there are plenty of jobs that can be saved, companies can find alternative solutions, they find a buyer for a business rather than closing it; and so when there are layoffs, it doesn’t mean that jobs totally disappear: The government is fighting, battling against layoffs…”

But according to rating agency Standard & Poor’s, Paris is not battling hard enough to put in place economic reforms which is why it downgraded the country’s credit worthiness.

That outraged the finance minister who said: “I think that Standard & Poor’s has not given sufficient emphasis to our [the government’s] reforms, which is why I said that S&P’s criticisms were excessive, and even inaccurate; and now we have to focus on our fiscal efforts, primarily on reducing public spending.”

The Bank of France said the eurozone’s second largest economy did grow in the third quarter, but by just 0.1 percent, not enough said S&P for Paris to get its debt down to the levels that the European Commission is demanding.

The government plans to reduce the public deficit to 3.6 percent of GDP by the end of 2014. It is expected to be 4.1 percent at the end of 2013 and was 4.8 percent of GDP at the end of 2012.

The Bank of France says France’s economy is set to gain momentum towards the end of 2013 and will post growth of 0.4 percent on the quarter in the last three months of the year.

That was according to its first estimate released on Tuesday.

The government of President Francois Hollande is forecasting the economy will grow at least 0.1 percent over the whole of 2013 after France emerged from recession at the start of the year.

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