In the dark days of the global financial crisis, many European states from within the Eurozone found that they were running budget deficits well above the agreed limit of three percent of their GDP that they were required to meet to be allowed to adopt the Euro – even the prudent Germans fell afoul of this limit. Transgressors ought to have incurred the wrath of the European Commission and been subjected to fines and other measures designed to put the back on the straight and narrow. However, such was the unprecedented nature of the crisis that tolerance was shown all around, but nations were asked to produce a timetable and necessary austerity procedures to rectify the problem.
According to France’s original blueprint, drawn up during the administration of President Sarkozy, the nation was to have its deficit back under control by the end of next year. The French electorate, tired of austerity and looking for somebody to blame, swept Mr Sarkozy from power, replacing him with socialist, Francois Hollande. Mr Hollande planned to turn the nation’s fates around without further austerity measures, partially by taxing the wealthy to pay for creation of teaching jobs, amongst other things. However, things have not gone his way and France’s economy has failed to recover strongly. Mt Hollande now enjoys the lowest ever approval rating of a French president.
The French government has said that it will need an additional two years before the deficit can be brought under the 3% mark and are predicting that the deficit in 2015 will be 4.3%. France’s finance minister, Michel Sapin told a news conference: "We have taken the decision to adapt the pace of deficit reduction to the economic situation of the country. Our economic policy is not changing, but the deficit will be reduced more slowly than planned because of economic circumstances - very weak growth and very weak inflation."
France is anticipating weak growth this year, but intends to cut taxes to boost growth with the necessary money being found through public spending cuts (AKA austerity measures!). It is planned to trim an additional €50 billion in cuts by 2017 – which is a presidential election year. Social security spending, local and state governments seem likely to bear the brunt of the cuts. French public debt (not the “current account deficit”) is running at 95% of GDP.