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France exits EU deficit procedure after nine years - Commission

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France exits EU deficit procedure after nine years - Commission
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BRUSSELS (Reuters) – The European Commission on Wednesday recommended closing a European Union fiscal procedure against France, nine years after it was opened, saying the country had embarked on a “solid” path towards reducing its deficit spending.

The widely expected move comes as France’s deficit dropped below the required ceiling last year and is expected to stay below 3 percent of gross domestic product this year and next.

“We believe that the trajectory of France is robust and solid,” the EU economics commissioner Pierre Moscovici told a news conference.

The EU opened the procedure against France in 2009 when it expanded its public spending in the face of the global financial crisis.

The procedure could lead to fines but the commission has so far refrained from imposing financial sanctions. EU states decide the formal closure of a procedure following a commission’s proposal.

After years of spending above the EU limits, France recorded a deficit of 2.6 percent of its gross domestic product last year, as economic growth strengthened and President Emmanuel Macron took office.

The Commission forecast that the French deficit will drop further this year to 2.3 percent of GDP and will remain below the 3 percent ceiling in 2019.

However, the country’s debt remains well above the EU limit of 60 percent of GDP at over 90 percent of the economy. France is also the EU state with the highest level of public expenditure, the commission said.

“The effort should now focus on reducing the structural deficit and on improving the quality and the structure of the public expenditure,” Moscovici said.

In a statement released after the commission’s recommendations, France’s Finance Minister Bruno Le Maire said the French government would respect its fiscal commitments and pursue reforms to facilitate growth.

(Reporting by Francesco Guarascio; Editing by Richard Balmforth)

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