France on collision course with the EU over budget deficit

 
Billy Ehrenberg
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France: Missing targets (Source: Getty)

It's not like France is trying and failing to keep its budget deficit in line - the country is actually planning to overrun.

So said an EU official to the Wall Street Journal, which is reporting that the EU may reject France's 2015 budget proposal - a move that could lead to a wider conflict.

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The EU expects countries to get their budget deficits down to three per cent of GDP, but France has announced it expects to run a deficit of 4.3 per cent next year.

Not until 2017 does the French government expect to be at 2.8 per cent.

The European Union could reject this and send it back to France for revisions; especially given that the country's deficit reduction programme amounts to only 0.2 per cent of GDP, far less than the 0.8 per cent the government had agreed with Brussels.

Many countries have missed budget deficit targets in the past, but France has overshot considerably for some time.

According to the WSJ, officials have indicated that “people are ready to let the big boys in Brussels reject the budget.”

A rejection could call Italy into the fray as it too believes that deeper cuts will adversely affect the already struggling economy.

Italy is technically in recession, after two consecutive quarters of negative growth.

If the budget is rejected, it will be sent back to France on 29 October.

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