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Balance of the French public finances

Published on November 15, 2011
Communiqué issued by the Ministry for the Economy, Finance and Industry

Paris, November 10, 2011

The European Commission has today published its new economic forecasts for the member states. With regard to France, the Commission estimates that growth should settle at 1.4% in 2013, as compared with the government’s prediction of 2%, and that an extra budgetary effort would consequently be necessary in 2013 to guarantee the return of the deficit to 3% of GDP.

François Baroin, Minister for the Economy, Finance and Industry, and Valérie Pécresse, Minister for the Budget, Public Accounts and Administrative Reform and Government Spokesman, reiterate the government’s total determination to follow the sacrosanct path it has set itself of reducing the public deficits. The commitment to bring the deficit down to 3% of GDP in 2013 and then to equilibrium in 2016 will therefore be met. The new measures announced by the Prime Minister on 7 November will lead to growing savings over time, totalling €65 billion by 2016.

Those measures guarantee respect for the deficit target in 2012. By also taking into account all the measures taken since 2007, savings of €51 billion are planned in 2011 and 2012, half of them being in the area of spending. Furthermore, €6 billion in appropriations are being held back in the 2012 budget in order to guarantee respect for the deficit target even if growth is below 1% of GDP. The measures announced on 7 November also guarantee respect for the 2013 deficit target.

Indeed, they represent savings of €11 billion (0.6 percentage points of GDP) in the 2013 fiscal year, thanks in particular to the elimination of tax breaks and welfare benefits, a freeze on certain tax bands and the acceleration of pensions reform. The 2013 budget will also include a provision should growth be weaker than expected.

François Baroin and Valérie Pécresse thus confirm that France will stick to her commitments./.

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