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François Hollande “Anticipated” Poor Growth Forecast

Translated Wednesday 23 May 2012, by Holden Ferry and reviewed by Henry Crapo

Not even in office yet and already faced with his first challenges. It was with a certain detachment that François Hollande received the forecast released by the European Commission on Friday predicting poor growth for 2013 and out-of-control French government spending.

In Tulle (Corrèze), François Hollande, who became President on Tuesday, stated: “We had anticipated this. I asked the Cour des comptes (the French official auditing body for public accounts) for an evaluation of the actual budgetary situation of our country, and I have known for several weeks now that there was a much bigger degradation of our national accounts than the departing government has admitted.”

Pressure from Brussels

Hollande is waiting to see the report from the Cour des comptes before making a decision. But Brussels is already putting pressure on the socialist president with a growth estimate of 0.5% for France this year, which is on par with the socialists’ estimates, but only 1.3% for next year, which is below the 1.7% forecast by the new president. For the European Commission, this forecast would lead to further tightening of the budget in order for France to maintain its goals of reducing its government deficit.

Debt Reduction Goal

To reassure Brussels and the markets, the person in charge of former socialist candidate’s presidential program, Michel Sapin, confirmed to the AFP the goal of reducing the deficit to 3% of GDP next year, assuring that the future government would take “the necessary steps.” But he didn’t specify exactly which steps would be taken, instead referring back to Hollande’s economic program: “Policy change to bring spending under control, increasing government revenue in a fair and efficient way, and above all, a change in economic policy on both a national and European level in order to stimulate growth.”

“Reflection of Sarkozy’s Policies”

According to Michel Sapin, who is expected to be granted a position in the ministère de l’Economie (Ministry of Economic Affairs), Brussels’ forecast “is a reflection of the policies that President Sarkozy and his government have led up to now. If the policies led up to now had continued, it would have led to weaker growth than the departing administration had predicted, a higher-than-expected increase in spending, and less government revenue. They have left behind a lot of problems, that’s what the European Commission is telling us.”

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