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Bank of France warning

April 10, 2013

The Bank of France has expressed concern over the country's high debt load, urging the government to look for ways of saving money. The central bank's chief came out in favor of freezing pensions.

https://p.dw.com/p/18CzC
Sack full of euro coins Fotolia/TwilightArtPictures
Image: Fotolia/TwilightArtPictures

Bank of France Governor Christian Noyer said Wednesday the government would be well-advised to take drastic measures to rein in spiraling public spending.

He told Europe 1 radio that France had to find ways of saving some 40 billion euros ($52.4 billion) this year and next to reach the EU deficit limit of 3 percent of gross domestic product (GDP).

Noyer spoke of a required effort across the board which would first and foremost have to include the freezing of pensions. He added that genuine endeavors to bring down the debt load could even require a 10 to 15-percent decrease in pensions.

Export Neighbour France

No easing of fiscal discipline

"We're not in austerity, but are confronted with the need for a very strict management of public finances, because our deficit is too high," Noyer commented. "Generally speaking, we don't have any choice as we cannot continue expanding the deficits and debt and dumping it on future generations."

Noyer also urged a freeze on civil servants' salaries and social benefits, adding that growth would return to France only via structural reform of the domestic labor market.

A day earlier, the Bank of France confirmed its forecast for the first quarter of this year, saying GDP growth would be just 0.1 percent. Economics Minister Pierre Moscovici indicated that he expected full-year growth at the same level, thus revising down an earlier outlook for a 0.8-percent expansion of the second-largest economy in the eurozone.

hg/kms (AFP, Reuters)