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France backs away from 2015 savings target

The French government has indicated it may not stick to its savings targets for next year. Paris cited continuously low inflation in the country, which it claimed made a reorientation rather likely.

French Finance Minister Michel Sapin hinted on Tuesday that the country's much-vaunted objective to cut 21 billion euros ($28 billion) in public spending next year might not be achieved.

He told AFP news agency the 2015 savings target could be in jeopardy.

"We can't have the same targets with inflation that is becoming very low," Sapin said in response to a question as to whether current aims were still realistic.

No light at the end of the tunnel

The French government under Socialist

President Francois Hollande

has for months been fighting stagnating growth in the eurozone nation and has voiced fears of full-blown deflation. It has also expressed skepticism about the mid-term impact of hefty budget cuts on the economy.

In mid-August, the finance minister already revised down the expected growth rates for this year, saying that the economy would expand by only 0.5 percent instead of the 1.0 percent forecast earlier.

Sapin also reckoned fresh borrowing would increase by over 4 percent instead of the previously envisaged 3.8 percent, significantly above the 3-percent limit stipulated under EU rules.

hg/sgb (AFP, Reuters)

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