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French public debt rises above €2,000,000,000,000

AFP/The Local · 30 Sep 2014, 09:14

Published: 30 Sep 2014 09:14 GMT+02:00

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France's public debt topped the symbolic level of €2.0 trillion for the first time, in the second quarter of the year, the national statistics agency INSEE said Tuesday.

The total national debt amounted to €2.023 trillion ($2.57 trillion), INSEE said, which represents 95.1 percent of gross domestic product (GDP). 

European Union rules limit debt to 60 percent of GDP.

In the first quarter of the year, the debt stood at €1.995 trillion, or 94.0 percent of GDP, INSEE said.

France is already on a collision course with the EU over its budget deficit, which is supposed to be kept under three percent of GDP.

Paris promised to bring the deficit under three percent by next year but, in a stunning about turn, announced earlier this month that it was pushing back this target until 2017.

France is struggling with an economy at a standstill and sky-high unemployment.

There has been zero growth for the first two quarters of the year and Finance Minister Michel Sapin is banking on sluggish output of 0.4 percent for the whole of the year.

France will on Wednesday publish its annual budget expected to confirm the gloomy outlook and reaffirm it will miss its deficit targets.

The economy ministry stressed that the government's plan to clean up the public finances and make sweeping cuts in public spending "should allow us to stop the growth in debt."

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"France also enjoys the confidence of investors which allows the state but also companies and individuals to borrow at very low rates," the ministry said.

To combat the economic crisis, the deeply unpopular government of President Francois Hollande has put in place a "Responsibility Pact" which offers companies tax breaks of €40 billion in return for creating 500,000 jobs over three years.

However, given the parlous state of the public finances, the tax breaks are compensated by €50 billion in public spending cuts.

AFP/The Local (ben.mcpartland@thelocal.com)

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