French Public Debt to Rise to Record 66.1% of GDP This Year
March 17 (Bloomberg) -- France's public debt will rise to a record 66.1 percent of gross domestic product in 2005, more than forecast, as rising unemployment erodes government finances, according to an aide to Finance Minister Thierry Breton.
France yesterday reported to the European Union that its debt will probably rise to 1.117 trillion euros ($1.5 trillion) this year, said the official, who declined to be identified by name. In September, the government forecast debt of 65 percent of GDP this year. Under EU rules, debt shouldn't exceed 60 percent of GDP.
French debt has ballooned along with the deficit as the economy slowed in 2002 and 2003. Unemployment climbed to the highest in five years in January even after the economy expanded by 2.3 percent last year.
``At the moment, the government's top priority is growth and employment, said Maryse Pogodzinski, an economist at JPMorgan Chase & Co. in Paris. The debt is ``a threat to growth in four or five years.''
France, along with Germany and Italy, is pushing to loosen European Union budget rules to enable them to foster economic growth. Germany and France have been over the budget deficit limit of 3 percent of GDP since 2002, and France's debt-to-GDP ratio first surpassed the EU's 60 percent ceiling for in 2003.
Finance Ministry spokesman Benoit Gausseron declined comment on the debt level.
EU Budget Rules
France's public debt last year rose to 1.066 trillion euros, or 65.6 percent of GDP, up from 63.9 percent of GDP in 2003, government statistics office Insee said March 1.
Finance ministers failed to agree on a proposed relaxation of the budget rules on March 8 after clashing over the list of extenuating circumstances that would save high-deficit countries from sanctions. They meet again on March 20 to seek an agreement. If they fail, European leaders may have to come up with a compromise at a summit in Brussels on March 22-23.
The French Finance Ministry forecasts a budget shortfall of 2.9 percent of GDP in 2005, down from 3.7 percent last year, as spending growth is held at the rate of inflation and utilities make one-time payments in exchange for the government assuming their pension liabilities.
Meanwhile, over the Channel in Booming Britain, the UK has the lowest public GDP debt of any G8 nation, with debt FOUR TIMES lower than in France.
March 17 (Bloomberg) -- France's public debt will rise to a record 66.1 percent of gross domestic product in 2005, more than forecast, as rising unemployment erodes government finances, according to an aide to Finance Minister Thierry Breton.
France yesterday reported to the European Union that its debt will probably rise to 1.117 trillion euros ($1.5 trillion) this year, said the official, who declined to be identified by name. In September, the government forecast debt of 65 percent of GDP this year. Under EU rules, debt shouldn't exceed 60 percent of GDP.
French debt has ballooned along with the deficit as the economy slowed in 2002 and 2003. Unemployment climbed to the highest in five years in January even after the economy expanded by 2.3 percent last year.
``At the moment, the government's top priority is growth and employment, said Maryse Pogodzinski, an economist at JPMorgan Chase & Co. in Paris. The debt is ``a threat to growth in four or five years.''
France, along with Germany and Italy, is pushing to loosen European Union budget rules to enable them to foster economic growth. Germany and France have been over the budget deficit limit of 3 percent of GDP since 2002, and France's debt-to-GDP ratio first surpassed the EU's 60 percent ceiling for in 2003.
Finance Ministry spokesman Benoit Gausseron declined comment on the debt level.
EU Budget Rules
France's public debt last year rose to 1.066 trillion euros, or 65.6 percent of GDP, up from 63.9 percent of GDP in 2003, government statistics office Insee said March 1.
Finance ministers failed to agree on a proposed relaxation of the budget rules on March 8 after clashing over the list of extenuating circumstances that would save high-deficit countries from sanctions. They meet again on March 20 to seek an agreement. If they fail, European leaders may have to come up with a compromise at a summit in Brussels on March 22-23.
The French Finance Ministry forecasts a budget shortfall of 2.9 percent of GDP in 2005, down from 3.7 percent last year, as spending growth is held at the rate of inflation and utilities make one-time payments in exchange for the government assuming their pension liabilities.
Meanwhile, over the Channel in Booming Britain, the UK has the lowest public GDP debt of any G8 nation, with debt FOUR TIMES lower than in France.
