Sunday

25th Jul 2021

Paris short €43bn to meet EU deficit targets

  • France - seen as crucial to the eurozone's fiscal and budget discipline drive (Photo: Quinn Dombrowski)

The French government will have to find €43bn in order to bring the country's deficit in line with EU rules by 2013, a fresh report has shown.

A report on state finances by the national Court of Auditors said Paris will need to find up to €10bn this year and €33bn next year to reduce its budget deficit to 4.5 percent of GDP and then 3 percent of GDP.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"The situation remains extremely worrying,” court president Didier Migaud told Le Monde newspaper, referring to the state of the country’s public finances.

When asked how the money for 2013 will be found Migaud said “with more rigour.”

“In health, education, vocational training for example, France spends much more than other countries. But their results in these areas are significantly better than ours.”

“It is better to make efforts now than have them imposed by others tomorrow,” Migaud added.

The large sums are set to test Socialist President Francois Hollande's skills of persuasion.

He was elected in May on an anti-austerity ticket – although he always maintained that he would stick to France’s deficit-cutting promises.

But the report also shows that the battle will be even harder than expected – and some form of austerity will be needed.

The auditors suggested next year’s economic growth will be 1 percent, well short of the 1.7 percent predicted by the previous government while public debt is set to reach 90 percent of GDP by the end of the year – a level economists say affects growth. Under EU rules, countries have to keep their debt below 60 percent.

Meanwhile measures agreed after 6 May, the cut off point for the report were not included in the assessment – such as the decision to raise the minimum wage or France’s share in bailing out Spain’s banks.

"It will require unprecedented cuts to public spending as well as increases in taxation,” said Migaud.

The cabinet is on Wednesday expected to announce some money-raising measures while the 2013 budget to be published in autumn will be crucial.

The French government’s next moves will be keenly watched by Brussels. Paris - which has not had a balanced budged since 1974 - is seen as key to the credibility of the eurozone’s new emphasis on financial and budgetary discipline.

France is the second largest economy in the eurozone after Germany and so far investors have associated it with Europe's powerhouse.

But in January, one of the three biggest ratings agencies cut France's triple A rating, while the other two warned they may follow suit.

Hollande's perceived determination to cut back on his country's deficit will be key for investors to place France in the 'German' camp rather than associate it with troubled Italy and Spain.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

News in Brief

  1. Macron changes phone after Pegasus spyware revelations
  2. Italy to impose 'vaccinated-only' entry on indoor entertainment
  3. EU 'will not renegotiate' Irish protocol
  4. Brussels migrants end hunger strike
  5. Elderly EU nationals in UK-status limbo after missed deadline
  6. WHO: 11bn doses needed to reach global vaccination target
  7. EU to share 200m Covid vaccine doses by end of 2021
  8. Spain ends outdoor mask-wearing despite surge

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  2. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  3. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  4. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  5. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  6. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance

Latest News

  1. Far left and right MEPs less critical of China and Russia
  2. Why is offshore wind the 'Cinderella' of EU climate policy?
  3. Open letter from 30 embassies ahead of Budapest Pride
  4. Orbán counters EU by calling referendum on anti-LGBTI law
  5. Why aren't EU's CSDP missions working?
  6. Romania most keen to join eurozone
  7. Slovenia risks court over EU anti-graft office
  8. Sweden's gang and gun violence sets politicians bickering

Join EUobserver

Support quality EU news

Join us