France cuts growth forecast for 2014-15

France cuts growth forecast for 2014-15

Thu Aug 14, 2014 10:13AM GMT

The French government has slashed its growth forecasts for both the current and next year, saying it would miss its public deficit target in 2014 after data showed the economy delivered no growth for the first two quarters.

The Thursday move came as France’s Finance Minister Michel Sapin wrote in French daily Le Monde that the EU must adapt its deficit rules in light of the bloc’s weaker-than-expected economy.

Sapin further said this year’s growth would be at around 0.5 percent – half the previous forecast of one-percent, predicting that the country will miss its public deficit target for 2014.

Sapin did not specifically comment on the key 2015 target – when France’s public deficit is due to come into line with the EU’s ceiling of three percent of Gross Domestic Product (GDP), though he hinted that goal would not be met, stating that France would slash its deficit “at an appropriate pace.”

Pointing to German data showing a surprise economic contraction in the second quarter as well, the French minister underlined that France was not alone in the eurozone with a weaker-than-expected economy and called for a joint European response that would include major investment projects in infrastructure.

“We must adapt the pace of deficit reduction to the exceptional situation… of growth that is too weak everywhere in Europe and the exceptional situation of inflation that is too weak across Europe,” Sapin said during an interview with Europe 1 radio.

French President Francois Hollande had already failed to meet his target to cut down unemployment by the end of last year. He also faces dissent from a number of Socialist lawmakers unhappy with spending cuts.

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