28 Jun 2013
Flash: France has small chance of hitting deficit targets? - BTMU
Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes claims that France only has a small chance of hitting its deficit targets this year.
He begins by highlighting that French consumer spending has just been released and the m/m gain of 0.5% in May was stronger than the expected -0.1%, so the annual rate at 0.6% managed to remain positive for the third consecutive month, the first time that has happened since April 2011. He adds, “So some good news as evidence of better economic conditions slowly emerge.”
However, he continues to highlight that the fiscal situation in France remains poor, with the FT today highlighting the report released by the Cour des Comptes – the national auditor - which concluded that France has only a “small” chance of hitting its 3.7% deficit target for this year. He writes, “Even under the relaxed guidelines from Brussels the report states that managing real spending increases of 0.4% in 2014 and 0.2% in 2015 would imply cuts of EUR 13bn and EUR 15bn respectively, double the savings made in 2012 and 2013. Fiscal drag has a lot more to go in Europe and economic weakness will weigh on the euro as we move forward.”
He begins by highlighting that French consumer spending has just been released and the m/m gain of 0.5% in May was stronger than the expected -0.1%, so the annual rate at 0.6% managed to remain positive for the third consecutive month, the first time that has happened since April 2011. He adds, “So some good news as evidence of better economic conditions slowly emerge.”
However, he continues to highlight that the fiscal situation in France remains poor, with the FT today highlighting the report released by the Cour des Comptes – the national auditor - which concluded that France has only a “small” chance of hitting its 3.7% deficit target for this year. He writes, “Even under the relaxed guidelines from Brussels the report states that managing real spending increases of 0.4% in 2014 and 0.2% in 2015 would imply cuts of EUR 13bn and EUR 15bn respectively, double the savings made in 2012 and 2013. Fiscal drag has a lot more to go in Europe and economic weakness will weigh on the euro as we move forward.”