PARIS (Reuters) – French Finance Minister Michel Sapin announced on Wednesday that France will need until 2017 to bring its public deficit down to three per cent of output, breaking its promise to EU partners to reach that goal by 2015.
It was the latest in a succession of missed deficit targets by Paris. Sapin told a news conference that France was not asking for any change in the European Union’s rules on budget limits, but that it wanted Brussels to take into account the continuing weakness of the eurozone’s second largest economy.
“With growth and inflation weak, the deficit reduction we are planning for 2015 will be limited with a deficit around 4.3 per cent of Gross Domestic Product in 2015 and coming under the three per cent threshold in 2017,” Sapin said.
Sapin said the deficit would actually rise slightly to 4.4 per cent this year and that the government would maintain the current plan for 21 billion euros of public spending savings in 2015 while not raising taxes during that year.
He forecast that the French economy would grow 0.4 per cent this year and 1.0 per cent next.
The announcement had been widely expected after a number of recent suggestions by the government that it was struggling to maintain its deficit commitments and calls for the European Union to use flexibility in applying its Stability and Growth Pact mechanism designed to keep a cap on national deficits.
The yield on the benchmark French 10-year bond was largely unchanged at 1.37 per cent after the announcement.