France cuts 2023 growth outlook to 1%, but sees deficit target intact

PARIS (Reuters) – The French authorities is decreasing the nation’s 2023 financial progress outlook, however sees no must revise its funds deficit goal in consequence, Finance Minister Bruno Le Maire mentioned on Tuesday.

Development within the euro zone’s second-biggest economic system is now anticipated to sluggish from an estimated 2.5% this 12 months to 1% subsequent 12 months, down from 1.4% beforehand, Le Maire instructed journalists as he outlined the primary forecasts underpinning the 2023 funds invoice due later this month.

Although barely bleaker, the French outlook contrasts sharply with the image rising from Germany, the place two of the primary financial institutes forecast final week that Europe’s largest economic system would contract subsequent 12 months.

“We’re protecting a constructive progress forecast, however we’re adjusting it to (mirror) the truth of the worldwide state of affairs, the vitality market tensions and our commerce companions’ difficulties,” Le Maire mentioned.

Regardless of the weaker outlook, he mentioned that abandoning France’s plans to scale back its public sector deficit from an estimated 5% of financial output this 12 months to lower than 3% in 2027 was not an possibility.

The federal government, in consequence, would persist with plans for a deficit subsequent 12 months of 5% of GDP because of expectations for larger company tax revenues and the scrapping of a tax on corporations’ turnover over two years somewhat than one.

Le Maire mentioned he’s additionally relying on lawmakers to provide you with plans to rein in France’s spending, which is among the many highest among the many industrialised international locations.

He mentioned that inflation would stay excessive via December, January and February as the federal government winds down a automobile gas rebate and permits a “contained” improve in energy and gasoline caps firstly of the 12 months.

Inflation was anticipated to ease again to 4.2% on common for 2023 from 5.3% this 12 months, Le Maire mentioned.

(Reporting by Leigh Thomas; Modifying by Paul Simao)