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France needs more time to cut

Wednesday, September 10, 2014 - 02:24

France says it will need until 2017 - instead of 2015 - to bring its public deficit down to three percent of output. As Hayley Platt reports it's the latest in a succession of missed targets and its EU partners areb't impressed.

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Paris is lifting the lid on its secret water source. Later this month the underground reserve of drinking water that supplies a fifth of Paris and was once the world's largest will be open to the public. It's part of a Europe-wide heritage scheme to open up areas never seen before. France has also been opening up its finances. It's admitted it will need an extra two years to bring its public deficit down to 3% of output. Finance Minister Michel Sapin. (SOUNDBITE) (French) FRENCH FINANCE MINISTER MICHEL SAPIN SAYING: "With growth and inflation weak, the deficit reduction we are planning for 2015 will be limited with a deficit around 4.3 percent of Gross Domestic Product in 2015 and coming under the three percent threshold in 2017." It's the latest in a series of missed deficit targets by Paris and CMC's Michael Hewson says it gives Brussels a dilemma. SOUNDBITE: Michael Hewson, Markets Analyst, CMC Markets, saying (English): "If the EU continues to give France leeway on this they're going to open themselves up to accusations of leniency when Spain didn't get any, Portugal, Ireland and Greece didn't. And it's going to really raise tensions between France, who are obviously the second biggest economy in the EU, and Germany." As if on cue - a budget speech from Angela Merkel - with a warning. (SOUNDBITE) (German) GERMAN CHANCELLOR, ANGELA MERKEL, SAYING: "We are seeing in a number of countries, for example in Spain, that reforms are making an impact and strengthening the dynamics. But we have to take it very seriously when the Commission rightly warns that backsliding on reforms is the biggest risk for further recovery." With government spending at 57% of GDP the French announcement was no surprise. SOUNDBITE: Michael Hewson, Markets Analyst, CMC Markets, saying (English): "For some time France has basically placed the blame at the doors of the European Central Bank. For me that's a bit of a cop out. If you actually look at France's finances, there's really been no serious attempt at all over the past two or three years to meet those deficit targets." France still managed to land a powerful post on the European Commission - the top economic job going to former Finance Minister Pierre Moscovici. But he will be supervised by former Prime Ministers of Finland and Latvia.

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France needs more time to cut

Wednesday, September 10, 2014 - 02:24