France’s Budget is in Trouble

• 03.10.2015, 21:38
•  Europe,  World

European Union Finance Ministers approved on Tuesday a two-year extension for France to bring its budget deficit below the EU ceiling of 3 percent of GDP, France24 reports. The 3 percent is mandated by EU regulation. Since 2009 it is the third extension France has been granted, which was widely expected.

France announced in October 2014 that its budget deficit for 2015 would hit 4.3 percent according to annual output. The move had led to expectations that France could become the first Eurozone country to be fined for breaching deficit rules. According to some sources the deficit was expected to be 4.1 percent of GDP in 2015 - the reason being the high unemployment rate.

The Finance Ministers are inclined to think that extending the deadline for correcting the deficit was justified by the fiscal effort made by France since 2013, BBC reports. The EU Finance Ministers called for additional fiscal effort by the end of April 2015 including extra structural measures that would allow it to reduce its budget deficit by 0.2 percent of GDP.

The European Commission recommended an extension of the deadline to 2017 from 2015, in order to give France more time to implement reforms and cut spending at a time of weak economy growth and low inflation, Irishtimes reports. Some of the Eurogroup members are inclined to be more flexible with France and with its weakened economy.