France Defisit Efforts Still Fall Short of EU Recommendations

        France said Wednesday it will make extra efforts to meet European targets for deficit reduction this year, but stopped short of committing to sufficient cuts to meet Brussels' targets for 2016 and 2017.
        The French government is making the extra savings as lower-than-expected inflation undermined its original plans for deficit reduction. But Finance Minister Michel Sapin said further cuts to meet targets next year and in 2017 would cause economic growth to "tumble" and prevent France from bringing down unemployment.
        "The recovery is under way and the concern of all of Europe is to support economic growth, which is too timid," Mr. Sapin said at a presentation of France's plans for its public finances.
        The plans are the latest step in a battle between Paris and Brussels over public finances. France has repeatedly missed deficit reduction targets in recent years and been forced to ask the European Commission for more time to get its finances within European rules.
        The conflict is now focused on the so-called structural deficit, a theoretical measure of public finances that strips out the impact of economic highs and lows. The extra EUR4 billion savings France pledged Wednesday are designed to meet the EU recommendation that the country reduce its structural deficit by 0.5% of economic output this year.
        In 2016, the finance ministry said it will make an extra EUR5 billion of spending cuts, but this will only bring the total reduction in the structural deficit to 0.5% of economic output, instead of 0.8% the European Commission recommends. In 2017, France says it will make a 0.5% effort again, while the commission recommends 0.9%.
        Mr. Sapin said he has discussed the plans with officials in Brussels and some at the commission have expressed sympathy with France's arguments for lower efforts on spending cuts.
        "I'm not doing anything behind the commission's back," Mr. Sapin said. "The debate is legitimate and we will be positive about it."
        Write to William Horobin at William.Horobin@wsj.com
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        (END) Dow Jones Newswires

        April 15, 2015 04:50 ET (08:50 GMT)

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