Bourse
Eco Focus - Edition August 29, 2011
France: new measures announced to cut public deficit to 4.5% of GDP in 2012
In late September, the French government is to present its draft budget for 2012. The public deficit is to be cut from 5.7% of GDP in 2011 to 4.5% of GDP in 2012. The aim is to bring the public deficit down to 3% of GDP in 2013.
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Content:
- Economic environment more degraded than forecast - 2011 deficit held at 5.7% of GDP - Initial components of 2012 draft budget - Impact on growth |
Extract: Important budgetary reduction measures planned in 2012
Faced with uncertainties about global growth, Europe's sovereign debt crisis, the concerns of the financial markets, and downward corrections to French growth forecasts, the government decided to announce on the 24th of August the main structural measures that will enable it to guarantee that it will meet its 2012 public deficit target. The measures mainly concern tax and social receipts. GDP growth is now officially forecast to come in at 1.75% in 2011 and 1.75% in 2012, compared with the earlier forecasts of respectively 2% and 2.25%, notably those used in the 2011-2014 stability programme announced last April. These would bring in 11 billion euros in 2012, which would reduce the structural deficit by 0.5% and help to cut the public deficit by slightly more than forecast, to 4.5% of GDP rather than 4.6%. If, as we believe, French growth should be revised downwards more sharply than in official forecasts, further savings measures will prove necessary. |
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