France says unlikely to meet 3% deficit pledge

“We won't be exactly at 3 percent this year, I think, for a simple reason, that is growth in France, in Europe and in the world is weaker than forecast,” Prime Minister Jean-Marc Ayrault said on national television.

He reaffirmed, however, that the Socialist government is sticking by its target of eliminating the deficit by the end of its term in office in 2017.

Earlier, Finance Minister Pierre Moscovici had signaled that France might revise is targets for growth of 0.8 percent, and for reducing the public deficit this year to the threshold imposed on members of the eurozone.

Saying that the targets were being held for the moment, Moscovici said after a cabinet meeting that the situation was difficult and that “if necessary we are able to have another look, to re-examine the different targets” for growth and for reduction of the public deficit.

At Deutsche Bank, analyst Gilles Moec commented that the statements by officials “suggest that the target is soon to be 'reassessed.'

“At the same time, we think the government will try to keep the market, and its European partners, on its side by announcing in more concrete terms how spending cuts, and not just tax hikes, will participate to the fiscal consolidation.”

On Tuesday, the independent French public accounts court warned that the estimates behind the target for reducing the public deficit were not realistic and that the government had to focus much harder on cutting expenditure.

For his part Foreign Minister Laurent Fabius said “I think it is probable,” when asked in a TV interview on Wednesday if he thought France would not be able to keep its promise to reduce the deficit this year to the threshold imposed on members of the eurozone.

European Economic Affairs Commissioner Olli Rehn said Wednesday that EU countries struggling to bring their public deficits back to within EU limits may win more time to meet the target if economic growth slows.

“If growth deteriorates unexpectedly, a country may receive extra time to correct its excessive deficit” as long as it has put in place a program to correct the public finances, he said.

He noted that Spain, Portugal and Greece benefited from such revisions last year.

The IMF trimmed last month its forecast for global growth this year to 3.5 percent, mostly due to weakness in the eurozone which it expects will stay mired in a recession for the second straight year.

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