France Set To Smash Euro Rules

[Llewlladdwr]

France Set To Smash Euro Rules
Written by Richard Carter

France looks set to smash the rules underpinning the euro, according to new figures published yesterday by the Finance Ministry.

Its budget deficit - tax receipts less public spending - could be as high as four percent of its gross domestic product (GDP) in 2003. But EU rules state that deficits may not exceed three percent of GDP.

The new figures show that the French deficit is ballooning.

http://www.euobserver.com/index.phtml?sid=9&aid=12313

[Paschall]

1. This should sound familiar

<snip> Officials in France have repeatedly stated that they are committed to the aim of reducing the deficit below the limit. However, large tax cuts projected for next year - as much as 3 percent, according to Le Monde - will make that task considerably harder. </snip>

"Whereas in 1995 {during Chirac's first term with a government drawn from the right wing} there was a budget deficit of 323 billion francs ($53.8 billion), in 1999 {under the Socialist government of Lionel Jospin} France succeeded in reducing its deficit to 206 billion francs ($34.3 billion)."
- Source http://www.mkeever.com/france.html

By the way, I think the original article is inaccurate. EU rules limit budget deficits to 3%, but France's deficit in 2002 was 2.6 or 2.7% (up from 1.5% in 2001), so it did not cross the yellow line last year as stated. And, though the EU and the IMF are concerned that the deficit remains close to the 3% limit, the IMF at least does not project a deficit overrun.