At this stage, the European Commission has no wish to pile any more pressure than is necessary onto the new French authorities over the budgetary policy they will pursue under President's Macron's five-year term in office. However, it believes that France should take the opportunity to come out of the excessive deficit procedure opened against it in 2007 as quickly as possible.
Presenting the spring economic forecasts of the European Commission (see other article) on Thursday 11 May, the European Commissioner for Economic and Financial Affairs, Pierre Moscovici, stressed that his was not a message of pressure or of sanctions. He said that with a minimum effort, France could bring its deficit below the 3% of GDP mark for the long term. “My message is positive. We will work together to ensure that the commitments are respected”, he added.
According to the European institution, the creation of wealth will stand at 1.4% of national GDP in France in 2017, following a level of 1.2% in 2016, a forecast unchanged from February (see EUROPE 11724). The French deficit will be brought from 3.4% of GDP last year to 3.0% this year. This forecast is not quite as good as the one put forward in February (2.9%). In 2017, unemployment in France will fall below 10% of the active population, whilst French government debt is expected to continue its climb, from 96.0% of GDP in 2016 to 96.4% in 2017.
Having been given an extra two years in 2015 to reduce its excessive deficit, France must bring it to -2.8% of GDP this year. In order to come out of the excessive deficit procedure for good, it must maintain this performance in the longer term, over two years. Paris would then be required to reduce its structural deficit (not including cyclical effects) by 0.6% of GDP but could, at the same time, benefit more from the flexibility of the Stability Act to carry out reforms.
The Commission, which will present its country-by-country recommendations on Wednesday 17 May, therefore hopes that the future French government will take advantage of the efforts of President Hollande's term in office and the current economic situation to draw a line as quickly as possible under an infringement procedure that has been in place since 2007.
This is the gist of several recent statements, notably by the President of the European Commission, Jean-Claude Juncker, who still feels that public expenditure in France is excessive. Moscovici has said several times that it is inconceivable that this country should be the last Eurozone country still in an excessive deficit situation, with Spain shortly to come out of the procedure in place against it (see EUROPE 11773). (Original version in French by Mathieu Bion)