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EU forecast contradicts Hollande's growth targets

Text by News Wires

Latest update : 2012-05-11

French President-elect François Hollande said Friday he would stick to his optimistic deficit-reduction targets, despite the European Commission saying it only forecast 1.3 percent growth for France next year versus Hollande's aim of 1.7 percent.

AP - French President-elect Francois Hollande suggested Friday that the government of outgoing leader Nicolas Sarkozy underestimated the country’s budget problems and wants a new audit of France’s books.

But Hollande, a Socialist elected Sunday to lead the world’s fifth-biggest economy, said that wouldn’t hurt his ability to fulfill campaign pledges. Those include higher taxes on the rich, thousands of new teaching jobs and freezes on some government spending.

And Hollande stuck to his own deficit reduction goals despite new European Union figures released Friday that paint a bleak picture for France and the whole eurozone.

“I have known for several weeks that there was a greater degradation than the outgoing government said there was. We conclude that this is a confirmation,” Hollande told reporters in the central city of Tulle.

He said the new figures do not necessarily mean he has less room to maneuver after he takes office Tuesday. “No, we had already expected this,” he said in remarks shown on French television.

He said he’s asked for an audit of France’s budget by the Cour des Comptes, budget watchdog. The audit is expected to be completed by late June.

The European Commission predicted 0.5 percent growth for France this year and 1.3 percent next year if current policies are maintained. Hollande is aiming for 1.7 percent growth next year.

The commission forecast that the deficit would be 4.2 percent next year, well above the 3 percent Hollande is targeting.

Hollande campaigned on promises to end a push for austerity started under Sarkozy, saying France and other European countries need government stimuli to get back to growth. Sarkozy argued that more government spending would only push debts up higher and worry markets and investors.

Hollande is now facing parliamentary elections next month that will determine the makeup of his government.

The National Assembly is currently dominated by Sarkozy’s conservative UMP party, but most polls suggest that the Socialists and their allies will win a majority. Marine Le Pen’s far-right National Front party is also angling for power after her strong third-place showing in the presidential election.

 

Date created : 2012-05-11

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