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French budget balance deteriorates in May

French budget balance deteriorates in May

PARIS: France’s budget deficit showed signs of deterioration in May, with the hole in the government’s public finances growing in monthly and annual terms as the country elected a new president. The latest budgetary assessment from France’s finance ministry showed the deficit in the five months to May grew slightly from €57.9bn to €66.4bn in monthly terms and above the €65.7bn over the same period last year.

Fixing France’s troublesome public finances – which have been above the EU’s deficit levels for over a decade – is a key plank of Emmanuel Macron’s plans to revamp the eurozone’s second largest economy. But Mr Macron was delivered a blow by the country’s state auditor which last week revealed a €9bn gap in the government’s books over the next two years (see chart above). Having pledged to bring down the deficit from 3.4 per cent to the EU’s ceiling of 3 per cent this year, Mr Macron will need to make savings of around €5bn this year, according to Cour des Comptes. Earlier this week, prime minister Edouard Philippe laid out the new government’s deficit reduction plans, which include raising the cost of cigarettes and delaying flagship policies such as reducing corporate tax. Today’s budget figures show the government’s revenues grew 1.2 per cent but were offset by an equivalent 1.2 per cent in spending.