World Economic outlook - France's economic growth forecast 2012 : Nicolas Sarkozy, French president, said in a series of interviews on French television on Thursday evening, that France's economic growth forecast for 2012 has been cut to 1%. He also said the admission of Greece to the euro was a mistake. France last had an annual budget surplus in 1974.
With just six months to go to a presidential election, the president announced that in light of the poorer economic outlook, new austerity measures will be necessary if France is to meet deficit targets and hold on to its treasured triple-A credit rating.
Sarkozy said the government will announce a new austerity plan of between €6 and €8bn after next week's G-20 summit of the leaders of the world's main developed and emerging economies in Cannes. He said the 2012 growth forecast was cut to 1% from 1.75% previously.
"We're sticking to our growth outlook for this year," Sarkozy said in an interview on French television. "For next year, we had forecast growth of 1.75%, but everyone knows that with the economic crisis there is little chance we can hit the target. We have agreed to revise down our forecast and to take it to the same level as our German friends, at 1%, for next year."
The government is to stick to the plan to cut the budget deficit to 3% of GDP in 2013 but despite the austerity, public debt is expected to peak at more than 87% of GDP in 2010
France's last annual budget surplus was in 1974 while the national debt to GDP ratio rose from 22% in 1975 to 82% in 2010.
The French president said he would work with Angela Merkel, German chancellor, to bring greater convergence between the French and German economies in sectors such as harmonising corporate and VAT tax rates to make the two countries the “heavyweight champion at the heart of Europe.”
Sarkozy said he was confident that Greece will emerge from its debt crisis but in his view it was s mistake in the first place to allow the country to join the euro system. source http://www.finfacts.ie
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