PARIS (Reuters) - France trimmed its 2012 budget deficit target on Friday and figures showed consumers are keeping the French economy moving, prompting President Nicolas Sarkozy to claim his policies were working for a country set to vote in a presidential election.
Sarkozy is lagging Socialist rival Francois Hollande in opinion polls for the two-round election on April 22 and May 6 and is vying to show that he is best placed to nurse the economy back to health.
French Budget Minister Valerie Pecresse said she now expected the public deficit to fall to 4.4 percent of gross domestic product this year, below a previous target of 4.5 percent. That followed official confirmation that last year’s shortfall was smaller than expected, at 5.2 percent of GDP.
Separate data from statistics agency INSEE showed consumer spending, the traditional motor of growth in France, jumped by a surprise 3.0 percent in February, springing back from a decline of the previous month.
Analysts polled by Reuters had predicted a modest rise of 0.2 percent.
“Today’s stronger-than-expected rebound (in consumer spending), albeit driven by one-off factors, brings a piece of good news for the near-term growth outlook and suggests that France will avoid a GDP contraction in the first quarter of 2012,” said Unicredit economist Tullia Bucco.
Data earlier this week showed that GDP grew 0.2 percent in the final quarter of 2011 after 0.3 percent growth from July to September, averting fears that France might be headed into another recession, although concerns remain about feeble purchasing power.
“The Socialists said France was in recession, as if they actually enjoyed it every time there was bad news for France,” Sarkozy told Europe 1 radio, announcing the 2011 deficit figure.
“Well now we’ve got the results - France is the only Western country that hasn’t had a single quarter of recession,” he said.
The French government recently revised upwards its growth forecast for 2012 to 0.7 percent from 0.5 percent previously, but cut its outlook for 2013.
Underlying figures on Friday nonetheless pointed to continuing weakness in the economy and challenges ahead for the economy, regardless of who wins 2012’s presidential vote.
The spurt in consumer spending growth was fuelled by the Europe-wide snap of cold weather at the start of February, which drove up purchases of energy by 11.7 percent on the month and clothes and textiles by 5.7 percent. Overall, spending was up a meagre 0.5 percent over the three months to end-February, a period which includes the usually buoyant Christmas festivities.
The country is also struggling under the burden of heavy unemployment, with the jobless rate already at a 12-year high and predicted to rise further in the first half of the year.
Separately, producer price data showed a 0.8 percent rise in the cost of goods going into factories, in a sign of the ongoing pressures businesses are facing as rising energy and commodity prices pinch profits and force firms to hike output prices.
INSEE figures also showed that France’s public debt stood at 1.72 trillion euros, or 85.5 percent of GDP, at the end of 2011, missing the government’s official target of 84.9 percent for the year.
Reporting by Vicky Buffery; Editing by