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Economy

France must find over six billion more euros - national audit office

media Finance Minister Pierre Moscovici Reuters/Gonzalo Fuentes

France must find an extra six to ten billion euros to meet its budget commitments this year and 33 billion euros next year, an audit for the new Socialist government said on Monday.
 

The report said that France could achieve this by cutting spending and raising taxes and compared the task to the measures taken in France between 1994 and 1996 in preparation for the adoption of the euro.

The audit, by the national accounting office, was handed to Prime Minister Jean-Marc Ayrault today, two days before the government announces budget adjustments.

France has promised its EU partners to reduce its public deficit from 5.2 percent of output in 2011 to 4.5 per cent at the end of this year.

The audit office said that its figure of 33 billion euros next year was based on predictions that the economy would grow by 1.0 per cent in 2013.

On Sunday, Finance Minister Pierre Moscovici said that the government was preparing to lower its forecast for growth for this year to 0.4 per cent from 0.5 per cent and for next year to 1.3 per cent from 1.7 per cent.

The audit office stated that for 2013, based on a target which would reduce the deficit to 3.0 percent of gross domestic product, far-reaching taxes such as VAT sales tax or the complementary social CSG tax, would have to be raised, at least temporarily.

The auditors also found that the risk of unexpected spending arising from commitments made by the last centre-right government was limited, totalling 1.2-2.0 billion euros, the biggest item being a Christmas bonus for people on subsistence benefit, which cost 450 million euros.

The prime minister's office said the report was in line with the government's policy and actions regarding deficit reduction.

A statement from the office expressed regret that from 2007 to 2011, when president Nicolas Sarkozy was in power, the public debt rose by 600 billion euros and that the annual cost of paying interest on that debt was now the single biggest item on the budget of the central government.
 

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