France fails to make promised EU debt reductions

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France fails to make promised EU debt reductions

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France has announced it will miss its EU budget target of bringing public debt under control by 2015.

It’s the latest in a long line of broken promises to the EU over the French deficit.

The debt is supposed to be reduced to below three percent of national output by next year but France’s finance minister Michel Sapin announced it was being pushed back to 2017 .

“The consequence of this strategy is that with growth and inflation weak, the deficit reduction we are planning for 2015 will be limited with a deficit around 4.3 percent of GDP in 2015 and coming under the three percent threshold in 2017,” Sapin said.

It comes as Germany has managed to balance its federal budget for 2015 for the first time since 1969.

German Chancellor Angela Merkel called on other EU states to respect their commitments and get away from debt-financed growth.

“We are seeing in a number of countries, for example in Spain, that reforms are making an impact and that they are strengthening the dynamics. But we have to take it very seriously when the (European) Commission rightly warns that backsliding on reforms is the biggest risk for further recovery,” Merkel told the German parliament.

It now falls to former French finance minister Pierre Moscovici – newly appointed as the EU’s economic affairs chief – to decide whether France will face disciplinary action.