France will maintain positive growth in 2013 in a euro zone that would experience another year of recession
Pierre Moscovici, Minister of the Economy and Finance, has taken note of the European Commission’s forecast which for France assumes a growth rate of 0.1% and a deficit of 3.7% of GDP in 2013 in a euro zone that would experience another year of recession.
"For 2014, the Commission forecasts growth of 1.2% and a government deficit of 3.9% of GDP, in a traditional scenario that doesn’t take into account the cost saving measures already planned[i].
According to the Commission, France would therefore maintain slightly positive growth in 2013 in a euro zone that would experience another year of recession, with a 0.3% decline in GDP.
This deterioration in the economic situation calls for measures to shift the balance of European economic policy toward growth, as François Hollande has been demanding since the first day of his election.
Pierre Moscovici notes with satisfaction that France’s structural adjustment effort has been recognized by the Commission. For the period 2010-2013 it would amount to 4.1 points, i.e. more than 1 point per year on average, as France had promised its European partners.
The minister notes that 2/3 of this effort was achieved over the fiscal periods 2012 and 2013, thanks to the measures adopted by the government within the framework of the amended Finance Act of August 2012 and the financial legislation for 2013 (finance act, social security financing act). He also underscores that the 2012 budget execution was exemplary, with government expenditure lower than that of 2011 and health insurance expenditure lower than that approved by Parliament.
In this context, it would not be appropriate, for our economy, to take additional measures this year, beyond those that have already been implemented. Consequently, Pierre Moscovici will urge his European partners to consider carrying over until 2014 the target of reducing the deficit to below 3%, which will mean guaranteeing the structural adjustment in 2013 and strengthening efforts in 2014 and over the years to come in order to achieve our goal of restoring structural balance by the end of the five-year term.
This will notably be achieved through the process to modernize public action, and the reform of our retirement schemes according to the timetable established during the major social conference.
Pierre Moscovici also reaffirms that the government will continue to implement its strategy to return to stronger, more balanced, and more socially-inclusive growth, notably through the swift implementation of the competitiveness pact, the swift transposition into law of the agreement on the protection of employment concluded by the social partners, the implementation of a national investment strategy to develop the sectors of the future, and structural reforms in the housing, energy and transport sectors.
Pierre Moscovici confirms the working schedule established by the prime minister: the government will present the multiyear public finance objectives within the framework of the stability program which will be submitted to Parliament mid-April and to the European Commission at the end of April. The economic forecasts will first of all be presented to the High Council of Public Finance which will be set up during the first few days of March.
[i] This notably relates to the measures that were recently outlined: reduction of state grants to local authorities; savings of €1 billion on assistance for businesses; reform of family policy.
The government spokesperson adds that the efforts to put our finances in order will continue in 2014. These efforts will focus primarily on public spending controls and will be shared between the government, local authorities and social security.