Brussels, 09/04/2015 (Agence Europe) - With the gradual return to growth, the French government still wishes to remain cautious in its budgetary forecasts, whilst targeting a “better” public deficit reduction trajectory than the one recommended by the Ecofin Council.
On Wednesday 15 April, the French Minister for Finance, Michel Sapin, will present the government with the stability programme to be submitted by France to the European Commission by the end of the month. This document will confirm an earlier estimation of the Ministry that the French deficit will stand at 3.8% of GDP in 2015, thanks, amongst other things, to a lower deficit in 2014 than initially anticipated (-4.0% in 2014) (see EUROPE 11283). For 2016 and 2017, this deficit will be around 3.3% and 2.7% of GDP respectively, confirming the French commitment to get it back below the 3% mark within two years, within the grace period granted by the Ecofin Council (see EUROPE 11271). The Council is calling on Paris to consolidate its public finances in line with the following trajectory: 4% of GDP in 2015, 3.4% in 2016 and 2.8% in 2017.
The French stability programme will predict a gradual improvement of the economy, with growth in GDP of 1% anticipated in 2015 and 1.5% in 2016 and 2017. “Our growth forecasts must be seen as lower limits and not upper limits, with the possibility of good news later on”, Sapin told an interview published on Thursday 9 April by Les Echos (our translation). He added that any additional revenue would “primarily go to reducing deficits more quickly”.
Maintaining €4 billion in additional savings in 2015. One of the conditions for the two-year grace period granted to reduce public deficit was the presentation of further savings in spring 2015. “We are going to make the four billion in extra savings called for by the European Commission. This is precisely the amount which will allow us to stick to our plan of 21 billion euros of savings and to offset the impact of the low inflation”, the Minister said. Paris has undertaken to reduce public expenditure by €50 billion by 2017, including €21 billion in 2015.
As regards reforms, France will notify the Commission of its programme of reforms at the same time as its stability programme. On Tuesday, the French government announced a tax bonus to encourage businesses to invest more. This will be paid for out of the budgetary savings and will not prevent the government from lowering corporate tax, Sapin explained.
The European Commission, which hopes first of all to analyse the “final texts” to be put to it before issuing its opinion “in May”, on Thursday 9 April welcomed the fact that “the member states have committed to continue ambitious structural reforms”. (Mathieu Bion)