PARIS (Reuters) - France will probably miss its goal to cut the public deficit to 3 percent of economic output this year, Foreign Minister Laurent Fabius said on Wednesday, the first government official to admit that analysts’ doubts are valid.
France is battling to maintain its credibility with its EU partners, rating agencies and financial markets in the face of serious misgivings over its deficit targets and efforts to reform a staid economy.
Asked whether the state audit body was right in suggesting on Tuesday that France would overshoot the target, Fabius replied: “I think it’s likely, and that means we must both avoid squeezing what remains of growth while being responsible and making sure the word savings is part of our vocabulary.”
Finance Minister Pierre Moscovici, interviewed shortly afterwards on France Info radio, said there was no change in the government’s goal of 0.8 percent economic growth in 2013 and a nominal deficit of 3 percent of GDP.
But he admitted the growth goal would be “difficult” and said the government would examine whether or not it needed to reevaluate those goals in late March, following the publication of the European Commission’s new economic outlook and a government report to the French parliament.
“Our goal is for 0.8 percent growth for 2013. Let’s admit it’s going to be difficult,” Moscovici said. “I am perhaps better placed than whoever else to know that, and it’s the same for the deficit. Then there is our timetable (for a review) which has not changed.”
Moscovici had already said a review could come around April.
France’s Court of Auditors said on Tuesday it believes the deficit goal will be blown off course as the economy veers close to recession, despite the government’s effort to make an unprecedented 38 billion euros of savings this year.
Reporting by Yann Le Guernigou and Catherine Bremer