September 19, 2017 / 10:04 AM / 10 months ago

France trims deficit outlook on firm growth

PARIS (Reuters) - France will cut its public deficit slightly more than previously expected this year and next thanks to better than forecast growth, Finance Minister Bruno Le Maire said on Tuesday.

French Finance Minister Bruno Le Maire attends a news conference about a report on French economy at the Bercy Finance ministry in Paris, France, September 14, 2017. REUTERS/Philippe Wojazer

Firm growth also meant that President Emmanuel Macron’s government can cut spending less in next year’s budget - his administration’s first - than it previously counted on.

Le Maire said that the government now targeted a public deficit of 2.9 percent of economic output this year and 2.6 percent next year, down from 3.0 percent and 2.7 percent previously.

“It’s a little better than what we first indicated to lawmakers, because the growth is a little better,” Le Maire told France 2 television in an interview.

France has run a deficit exceeding an EU limit of 3.0 percent every year since 2007 and it needs to keep below that limit for two years to exit the bloc’s excessive deficit procedure, which the slight revision puts in reach.

Le Maire added that the government aimed to cut public spending by 16 billion euros ($19.2 billion) in 2018, less than the 20 billion euros it had flagged previously.

On Monday, Le Maire and French budget minister Gerald Darmanin said that France’s economic recovery was strong enough for the government to be able to cut spending and the deficit without growth being affected.

The Finance Ministry expects slightly stronger tax revenues than it previously counted on, thanks to stronger growth than it had previously expected. It now expects 1.7 percent this year, up from an earlier estimate of 1.6 percent.

Against that backdrop, the government will go ahead with 10 billion euros of tax cuts planned next year, part of Macron’s plans to ease France’s considerable tax burden, the ministry said in a statement.

Reporting by Mathieu Rosemain; Additional reporting by Leigh Thomas; Editing by Richard Lough and Hugh Lawson

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