France’s €50 billion cuts plan queried by auditors

France's €50 billion cuts plan queried by auditors
France's auditors were the bearers of more bad news on the ailing French economy. Photo: Joel Saget/AFP
There was more bad news for the French government on Tuesday when a new report from national auditors said there was "little evidence" of how France could achieve €30 billion of its planned spending cuts and that deficit targets would once again be missed.

France's budget deficit will overshoot targets this year, heading for 4.0 percent of national output or more and there is little evidence of promised government spending cuts, national auditors warned on Tuesday.

The report from the highly influential body will be seen as a blow to Socialist President Francois Hollande, who has a record unpopularity rating and has based a U-turn on economic policy on cutting charges on business to be matched by huge cuts in planned spending.

France had been supposed to get its public deficit down to 3.0 percent of output but won a reprieve from the European Commission, and was aiming for 3.8 percent this year.

But the top national auditing body, the Accounting Court (Cour des Comptes), said that the deficit was on track to overshoot targets again, heading for 4.0 percent or slightly more of gross domestic product.

"If this risk materialises, the direction for public finances from 2015 to 2017 will be undermined," the auditors said in a report on the state of national finances.

The government has made cuts in planned spending totalling €50 billion ($68 billion) by 2017 the centrepiece policy under new Prime Minister Manuel Valls to restore export competitiveness, boost growth and cut record unemployment.

But the accounting court said that there was "little evidence" of how €30 billion of this would be achieved.

Referring to another high-profile element of Hollande's new policies, a big streamlining of the layers of local authorities to help cut spending, the court said the target of €11 billion of savings was "far from being assured".

This was mainly because the local authorities were likely to use the reform as an opportunity to raise local taxes, it warned.

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