France lowers growth forecast, predicts bigger deficits

The French economy will grow by 0.1 percent this year, unchanged from forecasts, but growth in 2014 will only reach 0.9 percent compared with earlier projections of 1.2 percent expansion of Gross Domestic Product, officials said Wednesday. In statements to the press, Finance Minister Pierre Moscovici also said France would fail to meet European Union target for reducing government deficits in 2013 and 2014, but he said the deficit target of 3.0 percent of GDP scheduled for 2015 by the EU would be met. In 2013, he said, the deficit target of 3.9 percent agreed with the European Commission in Brussels would be missed by 0.2 percent and it would reach 4.1 percent this year. France had initially hoped to bring the deficit down to 3.7 percent of GDP in 2013. In 2014, the Finance Minister said the deficit/GDP ratio would be 3.6 percent. France has embarked on a serious "hair cut" for government spending programmes and some assistance initiatives and has also increased both direct and indirect taxes in order to curb deficits. Earlier this year, the EU Commission gave France an extension of two years in which to get its deficit problem in order and Moscovici maintained that this would be the case by 2015. The government has previously maintained that the deficit in 2015 would drop to 2.8 percent of GDP but realistically it may just edge under the 3.0 percent requirement set by the EU Commission.