* Commission sees French budget deficit at 3.4 pct in 2015
* Spain set to miss its deficit goal too
* Greece, Portugal deficits seen falling
(Adds French reaction, details)
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 updated
economic forecasts for the 28 countries in the European Union.
France was meant 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
second largest economy.
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.
Finance Minister Michel Sapin, who will meet his euro zone
peers in Brussels later on Monday, said in a statement that
Paris would meet the 3 percent target in 2015.
"The government reaffirms its determination to ... make 50
billion euros worth of savings to bring the deficit to 3 percent
of GDP in 2015 and bring the pace of public spending growth in
line with inflation," he said.
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.
The difference in forecasts for the 2015 deficit between the
Commission and France may partly reflect 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.
Sapin said the Commission's forecasts took into account only
17.5 billion euros of a total 21 billion euros of savings
planned by France in 2015.
This year, the Commission expects a French deficit of 3.9
percent - 0.1 point higher than the government predicts.
EU policymakers believe France must meet the 3 percent
target to uphold the credibility of budget rules for the bloc -
known as the Stability and Growth Pact - that were sharpened in
2012 to prevent another debt crisis.
After years of bitter austerity and reforms, Greece will
have reduced its budget deficit to 1.0 percent in 2015 from 1.6
percent this year, the Commission said. The shortfall was 12.7
percent in 2013.
Another country that must do more to tackle its budget gap
is Spain, the Commission said, projecting that unless Madrid
changes policy, the deficit 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 is forecasting growth
of just 1.8 percent next year. The Commission sees a 2.1 percent
expansion in the economy.
Portugal, which will exit its EU/IMF bailout programme later
this month, will reduce its budget gap to 4.0 percent this year
and 2.5 percent in 2015, the Commission said, with economic
growth in those years of 1.2 and 1.5 percent respectively.
(Additional reporting by Ingrid Melander in Paris; Reporting by
Jan Strupczewski; Editing by Catherine Evans)