France does not grow in the second quarter, jumping deficit target – Reuters Italy

       

PARIS (Reuters) – France has cut its growth forecasts for 2014 and 2015 and announced that this year will fail to achieve the goal of deficit, after the data Insee showed a stagnation of the economy in the second quarter.

       

Preparing the ground for difficult negotiations at the European level, the French finance minister Michel Sapin, an intervention in the daily newspaper Le Monde, said that the EU should adapt their rules to a weaker than expected economic situation.

       

Even without reference to the key challenge of 2015 – that is, a deficit in line with the objectives of a maximum deficit of 3% – Sapin said that France will reduce its deficit to an “appropriate pace.”

       

“The truth is that, as a direct result of a stagnant growth and low inflation, France does not center the target on its deficit despite the expenditure control,” wrote Sapin.

       

France is not the only one to show a weaker economy than expected, said Sapin: “European policies must be refocused by adjusting the pace of deficit reduction to the current economic situation.”

       

While economists have long stressed that the government’s estimates were too optimistic, the government had so far always confirmed previsiioni.

       

Today the preliminary estimate communicated INSEE showed that in the second quarter, GDP remained unchanged, compared with a forecast (according to economists polled by Reuters) growth of 0.1%. And ‘the second consecutive quarter that the economy is flat.

       

Yesterday data showed inflation in France at the lowest level since November 2009.

       

Sapin said that GDP will rise 0.5% this year, compared to the previous forecast of 1% and that is unlikely to grow much more than 1% in 2015, whereas previously the estimate was about a +1 , 7%. Read more …