Despite poor growth forecasts and criticism from the opposition as well as from a part of its own camp, the government should achieve the target of less than 3% deficit by the end of 2017.
According to the rules of the Stability Pact, if France fails to reduce the public deficit below 3% by the end of 2017, the country risks a fine of up to 4 billion dollars.
The government has always claimed that the deficit would be 2.7% by the end of 2017, but these forecasts are based on optimistic growth projections: 1.5% in 2016 and 2017.
The European Commission, and now the government itself after the downward revision by Insee of the growth forecasts for 2016, is instead predicting 1.3% growth in 2016… And 1.4% in 2017.
However, and this is good news, the deficit would fall to 2.9% by the end of 2017. This is sufficient for Brussels. France would thus avoid the fine.
The European Commission is nevertheless pessimistic for the following year, 2018. France’s public deficit would rise again. Not by much, but enough for France to be once again outside the provisions of the Stability Pact.
The French deficit would increase by 0.2% between 2017 and 2018. By the end of 2018, it would therefore be 3.1%… more than the 3% foreseen by the Stability Pact.
However, the European Commission’s forecasts are made at a “constant policy,” meaning they do not take into account changes and reforms that would occur during 2017 and 2018.
