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France will stick to spending plans: Hollande

Posted by | June 28, 2013 .

BRUSSELS (AFP) – France will stick to its current spending plans, President Francois Hollande said early Friday, despite a warning from the government’s budget watchdog that the deficit might breach a revised limit recently agreed with the EU.

”What France must do in 2013 is to maintain its public spending,” Hollande told reporters at the end of the first day of a two-day EU summit in Brussels.

Paris’s goal was to bring the public deficit down to 3.7 percent of gross domestic product (GDP) at the end of the year, the government leader insisted.

It would be ”premature” to draw up an evaluation of the 2013 deficit, he argued, ”as everything will depend on tax revenues in the second half of the year”.

But he conceded that ”if growth remains as weak as this, which is to say, if we were in a shallow recession… the concern would be that revenues would be lower than anticipated.”

On Thursday, spending watchdog the Cour des Comptes said that if the French economy failed to grow by the 0.1 percent forecast by the government, then the public deficit could be as high as 4.1 percent of GDP in 2013.

That would put it well above agreed limits.

The European Commission and the IMF have both said France will not manage 0.1 growth..

The Cour des Comptes ”has done its work (and) confirms that the deficit ratio will be between 3.9 percent and 4.1 percent, depending on growth,” Hollande said.

He renewed his call to ”do everything to ensure the economy will grow in the second half”.

He underlined the government’s commitment to get spending under control, but said the state spending in 2013 would be exactly equal to levels seen in 2012.

In 2014 however, spending would drop by 1.5 billion euros.

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