* Commission sees French budget deficit at 3.4 pct in 2015
* Spain set to miss its deficit goal too
* Greece, Portugal deficits seen falling
By Jan Strupczewski
BRUSSELS, May 5 France will miss its 2015 budget
deficit target unless it makes rapid policy adjustments, the
European Commission warned on Monday as it unveiled its latest
economic forecasts for the 28 countries in the European Union.
France was supposed to have cut its deficit to 3.0 percent
of gross domestic product by 2013, but the EU extended the
deadline by two years due to extremely weak growth in the euro
zone's largest economy after Germany.
Paris then delivered a 4.3 percent deficit in 2013 instead
of 4.1 percent and is set to miss this year's target too. At the
same time, other euro zone countries in far more difficult
economic circumstances have managed to meet their obligations.
French Prime Minister Manuel Valls reaffirmed last Wednesday
that France intended to stick to the 3 percent target for 2015
after the French parliament backed a 50-billion-euro package of
savings that will be implemented through to 2017.
But the Commission, the EU's executive, forecast that unless
France goes even further it will end up with a deficit of 3.4
percent of GDP next year. If Paris fails to meet the 3 percent
target without a good excuse, it could face fines.
France's refusal to accept disciplinary action for missing
its budget deficit target in 2003 lead to a softening of budget
rules, which was one of the causes of the sovereign debt crisis
that afflicted the euro zone from 2009-2013.
Part of the difference in 2015 deficit forecasts between the
Commission and France is likely to stem from a more optimistic
view of economic growth in Paris, where the government sees GDP
expanding by 1.7 percent. The Commission expects 1.5 percent.
EU policymakers believe France must meet the target to
uphold the credibility of EU budget rules - known as the
Stability and Growth Pact - that were sharpened in 2012 to
prevent another debt crisis.
After years of tough austerity and reforms, Greece will have
reduced its budget deficit to 1.0 percent in 2015 from 1.6
percent this year. It was 12.7 percent in 2013.
Another country that must do more to rein in its budget
shortfall is Spain, the Commission said, projecting that unless
Madrid changes policy, the gap will grow to 6.1 percent in 2015,
from 5.6 percent expected this year.
Last week, Spanish Economy Minister Luis de Guindos said his
country was on track to meet its 2015 deficit goal of 4.2
percent of GDP, even though the government's growth forecasts
are only for 1.8 percent growth next year. The Commission is
forecasting 2.1 percent.
Portugal, which will exit its euro zone bailout programme
later this month, will reduce it budget gap to 4.0 percent this
year and 2.5 percent in 2015, the Commission forecast, with
economic growth of 1.2 and 1.5 percent respectively.
(Reporting By Jan Strupczewski; editing by Luke Bker)