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France

French premier forecasts deficit over 5% for 2009

Latest update : 2009-03-03

French Prime Minister François Fillon has said he expects the country's public deficit to be over 5% of GDP this year. The previous day, he had predicted that the French economy would contract by between 1% and 1.5% of GDP in 2009.

AFP - French Prime Minister Francois Fillon forecast on Tuesday that the country's public deficit would soar this year to more than five percent of gross domestic product (GDP) in the economic crisis.

France had earlier said it expected its deficit to be 3.2 percent of gross domestic product in 2008 and 4.4 percent in 2009.

Under European Union rules, France is obliged to keep its public deficit -- which covers central and local government and welfare budgets -- under three percent of GDP, but it has struggled in recent years to meet this limit.

"No stimulus plan will allow us to avoid the crisis," Fillon said on Europe 1 radio, giving the forecast. "No one can know when we will get out of it. What we do know is that the whole of 2009 will be a year of crisis."

Fillon, speaking during a visit to Paris wholesale food market at Rungis, said the new forecast takes into account an expected fall of 20 billion euros in tax spending and 30 billion dollars in extra stimulus spending.

The prime minister predicted the French economy would contract by between one and 1.5 percent this year. Finance Minister Christine Lagarde had on Monday forecast a contraction of 1.5 percent.

Date created : 2009-03-03

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