Brussels, 16/04/2015 (Agence Europe) - On Thursday 16 April, the European Commission refused to comment on the content of French stability and reform programmes that the French government published on Wednesday, preferring to await the presentation in May of the country-specific recommendations before commenting on the figures put forward by Paris.
France is meeting its commitments for 2015, and had therefore been granted a respite of two years (from 2015 to 2017) to bring its public deficit back below the 3% of GDP cutoff point. On Wednesday, France spelt out how it is planning to find an extra €4 billion of structural budget savings (not including cyclical effects) in order to make a 0.5% of GDP reduction in spending in 2015, as required by Brussels (see EUROPE 11295).
The trajectory recommended by Paris for 2015 for the nominal deficit (3.8% of GDP in 2015, 3.3% in 2016 and 2.7% in 2017) is better than that recommended by the Ecofin Council (4% in 2015, 3.4% in 2016 and 2.8% in 2017) (see EUROPE 11291 and 11271).
For 2016 and 2017, however, the French government wants to go beyond its commitment and cut public spending by €29 billion (€50 billion for 2015-2017, of which €21 billion in 2015). It foresees structural budget efforts of 0.5% of GDP for both 2016 and 2017, but Brussels wants 0.8% of GDP in 2016 and 0.9% of GDP in 2017.
In order to achieve a structural effort of 0.5% of GDP in 2015 and to compensate for the effect of low inflation on measures already taken, the French government has announced further spending cuts to the tune of €5 billion in 2016. State expenditure will be reduced by €1.8 billion, social security by €2.2 billion and local authority spending by €1.2 billion. (Mathieu Bion)