March 9, 2018 / 8:46 AM / 11 days ago

France can boost spending thanks to budget 'windfall': lawmaker

PARIS (Reuters) - The French government has room to boost spending in priority areas thanks to a lower-than-expected budget deficit in 2017, a senior lawmaker from President Emmanuel Macron’s party said.

French President Emmanuel Macron attends the 33rd annual dinner of the Representative Council of Jewish Institutions of France (CRIF - Conseil Representatif des Institutions juives de France) in Paris, France, March 7, 2018. REUTERS/Ludovic Marin/Pool

Joel Giraud, who is in charge steering budget legislation through the lower house of parliament, told Les Echos newspaper that last year’s deficit was likely to come in closer to 2.7 percent of GDP than the government’s target of 2.9 percent.

Asked if that meant the government had a “windfall” that could be used for extra spending, Giraud said: “The answer is yes, even if I prefer to speak of good fortune.”

“I think we can redistribute some of our good fortune albeit in a limited way as we have to remain credible before other European countries,” Giraud said.

Macron’s government has repeatedly said any extra room to maneuver created by a smaller than expected deficit would be used to pay down debt.

But with the 40-year-old leader’s popularity falling, calls are growing within his party for the “windfall”, as it has come to be called, to be in part spent. Giraud is the most senior authority on budget matters to say so.

Giraud said that it would be reasonable to use 80 percent of the funds to pay down debt and 20 percent could go to areas where extra spending was urgently needed like retirement homes or regions ravaged by de-industrialization.

The French economy grew 2.0 percent last year as business and consumer confidence soared, buoyed by a global rebound and centrist Macron’s election. The government had expected growth of 1.7 percent.

Macron’s government expects France to emerge from an EU excessive deficit procedure this year thanks to a 2017 deficit being in line European rules for the first time in a decade.

Reporting by Leigh Thomas; Editing by Richard Lough

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