Profligate France in line for EU fine for above-target borrowing

FRANCE’S large budget deficit is expected to break European limits this year, the European Commission (EC) forecast yesterday.

A deficit of 3.9 per cent of GDP this year and 3.4 per cent next year is above the three per cent target and means the country could incur a fine from the EC.

The forecasts also confirmed an increasingly sour inflation outlook for the Eurozone, with prices set to rise by just 0.8 per cent this year. As recently as February, the EC expected inflation of one per cent this year – 12 months ago, the forecast stood at 1.5 per cent.

Greece is worst placed, with prices to fall 0.8 per cent this year.

The forecast left the GDP growth projection for the Eurozone unchanged at 1.2 per cent.

By contrast, the EC hiked its UK growth forecast again, predicting GDP growth of 2.7 per cent this year. As a result the UK is expected to be the fastest growing major EU economy this year and in 2015.

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