France Faces Budget Cuts to Meet European Target
PARIS — Monday was probably the day that the honeymoon ended for France’s new Socialist president, François Hollande, and the hard work began. A much-anticipated report from the independent French agency that audits the budget said bluntly that Mr. Hollande and his government must find between 6 billion and 10 billion euros, up to $12.6 billion, in new revenue or spending cuts by the end of this year, and extract an additional 33 billion euros, or $41.5 billion, next year, to meet promised budget targets.
With economic growth nearly at a standstill — the auditing agency predicted it to be only 0.4 percent this year and 1 percent the next — France would need to cut its budget by about 4 percent next year to reach the European Union’s official deficit target for members of 3 percent of annual gross domestic product, a goal Mr. Hollande has vowed to meet. With France’s total debt now at 89.3 percent of G.D.P., and expected to exceed 90 percent this year, France risks being made the next target of speculators on the euro zone’s finances, after Spain and Italy — and perhaps even before Italy, some warn.
The coming year, 2013, is “a crucial one in which the budgetary calculation will be difficult, more difficult than thought because of slower growth,” said Didier Migaud, who is head of the auditing agency, the Cour des Comptes. “It will require an unprecedented brake on spending and higher taxes.” Mr. Migaud, who is a Socialist, said that France was “in the danger zone in terms of its economy and public finances, and we cannot rule out the possibility of a debt spiral.”
No one in the Hollande government will call what is coming “austerity,” instead placing blame for the need for adjustments on the global economic slowdown and on the previous government of Nicolas Sarkozy, whom Mr. Hollande defeated in May. “There will be tax increases; there will be spending cuts,” said the finance minister, Pierre Moscovici, last week. “But I reject any talk of austerity. We must avoid a budget policy that hurts economic activity.”Hollande knew this would be the case and lied through his teeth just to get elected.
Like all leftists. AND NOTE:The euro-crisis is LONG from over:
France risks being made the next target of speculators on the euro zone’s finances, after Spain and Italy — and perhaps even before Italy, some warn. ... France was “in the danger zone in terms of its economy and public finances, and we cannot rule out the possibility of a debt spiral.”MORE:
REPEAT: THE Euro crisis not over:
Fundamental weaknesses in the euro zone economy were back in the spotlight Monday, with the release of reports showing record unemployment in May, a decline in manufacturing and intense pressure on French public finances just days after European leaders decided on measures to reinforce the longer-term prospects for the currency union.
Unemployment in the euro zone rose in May to 11.1 percent from 11.0 percent in April, Eurostat, the statistical agency of the European Union, reported from Luxembourg. The May jobless figure was the highest recorded since the creation of the euro in 1999...STAY TUNED... AND BRACE YOURSELVES...