The French 2014 budget will be presented in full today with the government seeking to reassure voters with a plan that makes the bulk of savings through curbs in spending, having relied more heavily on tax increases so far.
The government has already said it expects 2014 growth to come in at a modest 0.9 percent, cutting its previous 1.2 percent prediction, and that after a 2013 which is likely to boast hardly any growth at all.
As a result, the budget deficit is expected to push up to a revised 3.6 percent of GDP from 2.9 next year. That puts Paris in line with IMF and European Commission forecasts but what Brussels thinks about the plan as a whole is another matter.
About 18 billion euros of savings for 2014 will be detailed with the bulk – about 15 billion – coming from spending cuts. Economists are already saying the new target to bring the deficit below 3 percent in 2015 could be difficult considering France’s decades-old struggles with cutting public spending.
Furthermore, EU officials are quietly expressing disappointment at the modest nature of French pension reforms, and it now seems the reforms will put a further burden on the public purse in the long run. The aim was to wipe out a pension deficit expected to reach 20.7 billion euros by 2020 if nothing is done, but government documents sent to lawmakers indicate the deficit for public-sector workers’ pensions would fall by only 800 million euros under Francois Hollande’s plan.