France lowers growth forecast, will miss deficit target
Tweet
Share
E-mail
French Minister for Economy, Finance, and Industrial, Energy and Digital Sovereignty Roland Lescure speaks during a press conference to update the governments growth and fiscal deficit forecasts for the 2027 budget, at the Bercy Economy and Finance Minis
By Leigh Thomas
PARIS, Sept 11 (Reuters) - France's economy will grow less than expected this year and the government will miss its budget deficit target, Finance Minister Roland Lescure said on Friday.
The downgraded outlook complicates the government's task of getting its 2027 budget passed in the coming months in a deeply divided parliament, where parties have hardened their positions before an April-May two-round presidential election.
Lescure told journalists he was lowering the government's 2026 economic growth forecast to 0.5% from 0.7% previously, but stuck with a projection of 1.0% for next year.
"This year has been marked by extreme crises involving four different types of shocks," Lescure told reporters.
Slower growth will make it more difficult for the government to trim its fiscal budget deficit as planned to 5.0% of economic output this year.
"The reality is that the budget was built on a 5% assumption. And the reality is that, today, 5% is no longer an option," Lescure said.
The minister did not give a new deficit target.
The economic fallout from the war in the Middle East andsummer heatwaves and drought that hit agriculture output have dragged down growth and put the government's fiscal targets out of reach.
"I think it is reasonable to say that economic uncertainty has never been greater than it is today," Lescure said. "We are operating under tight budgetary constraints; there is no more fat to trim."
Further complicating the picture, French borrowing rates have surged in recent weeks as investors have identified France as one of the weaker links in a global bond selloff due to its weak public finances and serial slippage on its deficit-reduction plans.
Lescure stressed that France had no difficulties in issuing debt, but acknowledged that it now cost more.
(Reporting by Leigh Thomas; additional reporting by Makini Brice, Ingrid Melander and Dominique Vidalon; Editing by Kim Coghill)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UK Green leader confirmed as candidate for parliament seat vacated by Starmer
- Trump and Musk super PACs unleash millions to boost Republicans in battleground races
- UK inflation expectations fall after Bank of England changes survey provider
Create E-mail Alert Related Categories
ReutersSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
