France’s Finance Minister says it will meet its target this year of cutting the public deficit to 3.3 percent of economic output, despite low oil prices.
Point of view
We have public deficit reduction targets for 2016, they will be met, just like they were met in 2015
At a news conference in Paris on Thursday, Michel Sapin insisted that the deficit reduction targets will be met “just like they were met in 2015”.
However the European Commission is less convinced the eurozone’s second biggest economy can achieve that.
In its latest forecasts the Commission has said it believes the deficit will still be 3.2 percent in 2017 when the budget gap is supposed to have been cut to 2.8 percent.
It is calling on Paris to take more action to address the problem.
In structural terms, France was asked by EU finance ministers to reduce the deficit by 0.5 percent of GDP in 2015, 0.8 percent in 2016 and 0.9 percent in 2017. But the Commission forecasts showed the cut last year was only 0.2 percent.
The reduction in the structural deficit this year in France will be only 0.4 percent — half of what is required — and the shortfall will actually rise 0.2 percent next year, according to the Commission’s forecasts.
EU budget rules oblige governments to keep the headline budget gap below 3.0 percent of GDP and cut the structural gap every year until they reach balance.