French minister sees deficit over 7 pct/GDP

By James Mackenzie

PARIS (Reuters) - France's budget deficit will widen to more than 7 percent of gross domestic product this year and next as tax receipts fall and unemployment rises, Budget Minister Eric Woerth said on Sunday.

Speaking on RTL radio, he said the deficit would come to between 7.0 and 7.5 percent of GDP in 2009 and 2010, more than twice the 3 percent ceiling laid down by European Union borrowing rules.

"This deficit is both the cost of the crisis and the price of recovery," he said.

The forecast is considerably higher than the current official estimate of 5.6 percent and comes after Woerth said last week that the deficit would be "above 6 percent" in 2009.

President Nicolas Sarkozy has presented measures worth more than 28 billion euros ($38.98 billion) in a bid to stimulate the economy, which national statistics office INSEE is forecasting will contract by 3.0 percent in 2009.

Woerth said the state deficit would total some 115 billion euros in 2009, with an additional 20 billion euros in the social security deficit, as the slowdown hits tax receipts and the cost of welfare and pension costs rises.

He forecast that the social security deficit, which includes pension and unemployment benefit payments, would rise to 30 billion euros in 2010, triple the 10 billion funding gap seen in 2008.

Company tax receipts, which in a normal year would total around 50 billion euros, would be less than half that level in 2009, he said.