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France lifts 2021 deficit, debt forecasts

FILE PHOTO: French Economy and Finance Minister Bruno Le Maire speaks during a press conference to present the details of new restrictions aimed at curbing the spread of the coronavirus disease (COVID-19), announced the day before by the president, in Paris, France, October 15, 2020. Ludovic Marin/Pool via REUTERS/File Photo

PARIS (Reuters) - France’s public deficit is expected to reach 9% of gross domestic product (GDP) in 2021, French Finance Minister Bruno Le Maire said on Sunday, up from a previous forecast of 8.5% as the country enters its third national coronavirus lockdown.

The change follows a downward revision of France’s growth forecast from 6% to 5% for this year, taking into account the effect of new restrictions throughout April brought in to tackle the COVID-19 pandemic. Schools are set to shut and non-essential shops have closed.

Le Maire, speaking on LCI TV, said France’s public debt was set to reach 118% of GDP this year, up from its latest forecast of 115%. In yet another estimate before that, Le Maire had said in December public debt could reach 122% of GDP.

Like many countries in Europe, France has ploughed billions of euros into propping up struggling companies with state-backed loans as well as helping them with rents and partial unemployment schemes.

President Emmanuel Macron had hoped to steer France out of the pandemic without having to impose another broad shutdown, sparing the economy a further blow, but COVID-19 cases and hospitalisations have surged in recent weeks.

Reporting by Sarah White; Editing by Andrew Cawthorne