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France expected to miss 2013 deficit target

Ahead of the release of the European Commission’s economic forecasts on Friday, French radio RTL informed that according to estimates growth in France would remain almost stagnant this year, while the fiscal deficit would reach 3.6%, compared with the target of 3%. EU sources suggested that the European Commission would require additional reforms to curb French public spending.

Even though the European Commission believes that France is on the right track and acknowledges the positive effects of the structural reforms implemented so far, it will have some recommendations for the French President Francois Hollande on how to restore fiscal order. They will most probably concern salaries, social organizations and social security and will entail strict surveillance of the country.

Still, other Eurozone countries such as Germany, Holland or Denmark might exert pressure on the European Commissioner for Economic and Monetary Affairs Olli Rehn to make one step further by penalizing France for its inability to reduce deficit.

Meanwhile, Francoise Hollande argued that even though public finances should be brought under control, fiscal austerity would only weaken the French economy further: "This is about improving the public accounts and at the same time boosting growth by improving the competitiveness of companies," he said in a speech. "This is not about adding measures on top of other measures because we don't want to be plunged into austerity.”

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