* Hollande acknowledges France will miss 2013 growth target
* Foreign minister leaks bad news first for second time
* France in battle to keep face as targets prove elusive
By Alexandria Sage and Jean-Baptiste Vey
PARIS/ATHENS, Feb 19 President Francois Hollande
acknowledged on Tuesday that France will miss its 0.8 percent
2013 growth target, hours after his foreign minister said the
growth rate could come in at less than half that level.
Laurent Fabius told RTL radio that French growth this year
would be no better than around 0.2 to 0.3 percent.
It was the second time in a matter of days that Fabius, a
prime minister in the 1980s and one of the most senior members
of the government, let the truth slip about France's economic
outlook after revealing last week that the deficit goal would be
"Since on the European level things don't seem to be going
so well, we will be obliged to lower it," Fabius said of the
Hollande's confirmation that the target would be missed -
made during a visit to Greece - will add to concerns that the
euro zone's second-largest economy is on the brink of recession.
Data last week showed it shrank in the final quarter of
"For 2013, everyone knows we will not reach the 0.8 percent
that was predicted," Hollande told a joint news conference with
Greek Prime Minister Antonis Samaras.
He said France would wait for the European Commission's new
economic outlook, due on Friday, before issuing a new target at
the end of March.
The admission that the growth goal will be missed, having
already been cut in September from an initial target of 1.2
percent, also pushes France's deficit-cutting goals further out
The government has defended its growth and deficit goals for
months against misgivings from economists, as it battles to
maintain credibility with EU partners and rating agencies, but
admitted last week it would fail to cut the 2013 public deficit
to within an EU ceiling of 3 percent of GDP.
"We're one of the countries that today, in terms of growth
plans or in any case activity, is in the least bad situation,"
Hollande said. "But we're far from our goals."
French benchmark 10-year bond yields, however, were barely
changed at 2.26 percent. For all its economic
problems, investors still treat France as a core euro zone
Bank of France Governor Christian Noyer told the Wall Street
Journal that the French government should maintain its current
plans for its finances this year and clarify where spending cuts
could come from in the future.
"If there is a small nominal distance from the 3 percent but
a significant effort on public spending, it is something that
will be understood and appreciated by markets," Noyer said,
referring to the EU ceiling for deficits at 3 percent of GDP.
He also said France should avoid hurting businesses by
cutting spending on pensions instead of boosting taxes,
according to the WSJ.
MORE SPENDING CUTS LOOM
Fabius said that the missed target meant additional savings
would be required at both the national and regional levels,
without giving details.
On Monday, Finance Minister Pierre Moscovici would not
comment on a media report the Socialist government may add some
5 billion euros ($6.68 billion) onto the 60 billion euros in
spending cuts it is already targeting over five years.
He said Paris could tweak its fiscal plans after talking to
the Commission about its new outlook.
Conservative politicians accused the government of bungled
communications, after Fabius appeared for the second time to
pre-empt an official revision to economic targets which would
usually come from the president, prime minister or finance
Prime Minister Jean-Marc Ayrault - who was forced last week
to respond to Fabius' remark on the deficit and acknowledge the
minister was correct - played down the muddle.
"There is no cacophony," Ayrault told reporters in Paris.
"The European Commission will announce its growth estimates
for France and each European country on Friday. The government
will then announce the decision it will take."