PARIS (Reuters) - France cut its public deficit less than expected last year, figures showed on Friday, missing the government’s target and further denting its fiscal credibility.
The deficit fell to 4.8 percent of economic output from 5.3 percent in 2011, falling short of the 4.5 percent target, data from the INSEE statistics office showed.
The government had said the target might be missed due to the cost of bailing out Franco-Belgian lender Dexia (DEXI.BR), but had indicated a figure of 4.6 percent.
The finance ministry put the overshoot down not only to the Dexia’s recapitalisation, but also contributions to the EU budget, a slight upward revision of the 2011 deficit, and weaker than expected growth.
That was partly offset by controls on spending, the ministry said in a statement, allowing the underlying structural deficit excluding swings in the business cycle to be cut by 1.2 percentage points of GDP, in line with expectations.
The government has already acknowledged that it would miss this year’s deficit target of 3 percent of GDP due to weaker than expected growth, and has asked its EU partners for more time to reduce the shortfall in public finances.
Under pressure from Berlin and Brussels not to ease up on its belt-tightening efforts, the government is due to sketch out revised plans for cutting its deficit in the coming weeks.
France’s gross public debt increased last year to a record 90.2 percent of GDP from 85.8 percent in 2011, INSEE said. The government had targeted 89.9 percent.
Reporting by Leigh Thomas; Editing by John Stonestreet