Paris looks to balance books
June 25, 2012
France must find up to 10 billion euros ($12.52 billion) to bring its public deficit level back to 4.5 percent of gross domestic product (GDP), Finance Minister Pierre Moscovici said on Monday.
He told the television network iTele that the new French Socialist-led government was looking for at least seven billion euros to bring spending to the level agreed on with eurozone partners this year. The 4.5-percent target is already substantially above that allowed under European Union deficit rules which stipulate that member countries must not crash a three-percent barrier of fresh borrowing.
For 2012, the French government believes it can rely mainly on tax hikes to raise the required resources. But to meet the much tougher 3-percent ceiling next year, Paris will have to touch the sacred cow of state spending which is higher than in any other EU nation at 56 percent of GDP.
Walking a tightrope
The new French government has set out to rescue the nation's finances. But while promising to bring its public deficits in line with EU regulations, it keeps arguing that large sums have to be invested first to stimulate growth and thus revive the troubled eurozone's economy.
France's budget consolidation drive will feature at a meeting between French President Francois Holland and German Chancellor Angela Merkel in Paris on Wednesday, as the two leaders prepare an EU meeting in Brussels on Thursday and Friday.
"Markets around the world expect Europeans to finally come up with structural solutions to the current crisis," Moscovici told reporters, adding that the upcoming EU meeting should "provide the euro with political backbone and sound banking regulations."
hg/ng (dpa, Reuters)