France agrees to EU demand to do more to cut its deficit, will revise 2015 budget

PARIS – France’s finance minister says the government will revise its 2015 budget after the European Union objected to the country’s flouting a deficit deal.

France is under pressure to get its public finances in order after admitting that its 2015 budget would break promises to bring its deficit below the EU limit of 3 per cent of gross domestic product within two years.

In a letter to EU Economics Commissioner Jyrki Katainen, French Finance Minister Michel Sapin said France will bring forward and expand efforts to combat tax evasion. Combined with new forecasts of lower interest expenses and lower contributions to the EU budget, the new measures will cut France’s 2015 deficit by an additional 3.6 billion euros ($4.6 billion).

Italy, another country in the EU’s sights over its budget, also unveiled new budget plans in a bid to appease Brussels. Finance Minister Pier Carlo Padoan said Italy would cut its deficit by an additional 4.53 billion euros ($5.75 billion) next year to bring down Italy’s deficit-to-GDP ratio in 2015.

The EU has until Wednesday to decide whether to reject a country’s draft budgets for failing to get public finances in line.

France doesn’t expect to respect the EU’s deficit threshold until 2017 — a decade since it was last in compliance. President Francois Hollande came into office promising to get it down by 2013, but then sought and was granted a two-year delay, which France now seeks to extend by another two years. Hollande blames a slow economy for the failures.