EU Sees Hollande Missing French Deficit Target as Exports LagMark Deen
France is set to miss its 2013 and 2014 deficit targets as President Francois Hollande’s policies fail to stem the nation’s loss of export market share, the European Commission said in a report.
The French budget deficit was probably equivalent to 4.2 percent of gross domestic product last year and will be 4 percent of GDP in 2014, instead of 4.1 percent and 3.8 percent, the report showed.
The commission, which gained a bigger role in monitoring national economic policies in the wake of Europe’s debt crisis, said Hollande’s efforts so far are slowing France’s decline in competitiveness without actually reversing it.
Hollande’s “reforms could gradually reduce the pace of losses in export market shares,” the EU said in the report. “Net exports are expected to provide nil contribution to growth in 2014 and to dampen it again in 2015.”
The commission raised its forecast for French growth this year to 1 percent from 0.9 percent as consumer spending accelerates.
Hollande’s initiative to trim payroll taxes as part of a “responsibility pact” with business isn’t included in the forecast because details have yet to be agreed.
France’s “structural” budget deficit, or budget shortfall excluding the impact of the economic cycle, improved by 0.75 percentage points last year and is slated to improve by 0.5 points this year, according to commission estimates. “The structural effort is projected to fall short of the levels recommended,” the commission said.
The national debt burden “will continue to rise” after climbing to 94 percent of GDP last year, though taxation, by contrast, will stop rising this year, according to the commission.