IMF says French contraction will be deeper than thought, and budget cuts must come from lower spending

The IMF has released its French mission report, and has downgraded its GDP forecast for 2013 from -0.1 per cent to -0.2 per cent. However the body believes that the economy will return to growth of 0.8 per cent in 2014 (previously 0.9 per cent).

It has been recommended that France must focus on containing expenditure, with budgets cuts coming primarily from lower spending. The IMF predicts that the French government deficit will be below three per cent by 2015.

A warning was given that if France does not speed up reforms, then it could risk losing out on to the fast-reforming Eurozone periphery.