French National Auditor Warns About Economic Reforms

France’s national auditor has warned that further cuts in public spending are needed if the country is to get its ailing economy back on track.

The Cour des Comptes said the deficit is on course to exceed the government’s 3.7% target due to lower tax receipts.

A cut in the “weight of public spending seems more necessary than ever”, the quasi-judicial body said in a report.

The government forecasts annual growth of 0.1 this year, but other economists have predicted contraction.

Earlier this year, the European Commission gave France an extra two years to bring its public deficit below an EU ceiling of 3% of gross domestic product.

But the Cour de Comptes said in its annual report that this was no reason to ease up on budget cuts.

In France, public spending accounts for about 56% of GDP, among the highest in the eurozone. Unemployment is at an all-time high.

Francois Hollande’s government aims to reduce public spending by 13bn euros in 2014 and 15bn euros in 2015 by cutting state aid and local government budgets.

But the influential Cour des Comptes said this was not enough.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza