French Finance Minister Pierre Moscovici said 2013 will be a “very difficult year” of weak economic growth, according to an interview published in Le Journal du Dimanche.
The end of this year will be “especially” difficult, the minister was quoted as saying by the weekly newspaper. France will still keep its growth and deficit targets and focus on lowering debt, he said.
The country is targeting gross domestic product expansion of 0.8 percent next year, which would help reduce the budget deficit to 3 percent of GDP. Business confidence and industrial production indicators published earlier this month unexpectedly declined, indicating the economy is on the verge of its second recession in three years.
Moscovici rejected a claim made last week by Laurence Parisot, head of business lobby group Medef, that the country is already in recession, according to the newspaper. Next year’s economic targets can be met if “uncertainties” surrounding the euro are lifted and France is able to attract investment and sustain consumer spending, he told the Journal du Dimanche.
French debt compared with growth is “at the limit” of a level consistent with the country’s AAA rating, Fitch Ratings said two days ago. There is a slightly greater than 50 percent chance of a French downgrade, the agency said.
President Francois Hollande has announced about 27 billion euros ($35 billion) of tax increases since coming to power earlier this year as he struggles to cut the deficit and raise competitiveness. Even so, the government risks missing its 3 percent deficit target as growth disappoints, the International Monetary Fund and the European Commission have said.
Talks between employers and unions aimed at making French employment laws more flexible may lead to an agreement this week, Labor Minister Michel Sapin told Europe 1 radio today. The rules will in any case be overhauled to reduce unemployment, he said.
“All conditions for an agreement” to be signed are present, he told the radio station. “The government wants a deep reform.”
The government won’t give an additional increase to the country’s minimum wage on Jan. 1, Sapin added. An adjustment to the minimum will be announced tomorrow and it could be further modified when growth returns to the French economy, he said.