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France to unveil plan to reach 2014 deficit target

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(Globalpost/GlobalPost)

France is to present Wednesday a plan to get its public deficit back under the EU limit of 3.0 percent of output by 2014, a year later than expected, through an broad effort that is likely to include higher taxes.

France was initially to have cut the deficit to 3.0 percent of gross domestic product already this year, but has asked for more time owing to weak growth which has pushed the estimated 2013 figure up to 3.7 percent of GDP.

Eurozone members are expected to run public deficits of no more than 3.0 percent of GDP, and are supposed to work towards a balance, or even a surplus in times of economic growth.

Sources say that the government is pledging to bring the deficit down to 2.9 percent next year to bolster its chances of obtaining the delay, but President Francois Hollande has already ruled out more sharp spending cuts to reach the target this year.

European Union members will have a look at the French plan in June.

Countries that are judged to not be making sufficient efforts to bring their deficits back under the limit can in theory face fines.

But Olli Rehn, European Union Economy and Euro Commissioner, has said that France could be given more time to meet its commitments as Spain and others have been during the eurozone's three-year debt crisis.

Although the government has vowed it would keep social charges at stable levels next year, one-third of the effort to reach the deficit target will probably come through tax hikes while two-thirds are to be achieved through reduced public spending.

Pension reforms could also require higher payments.

The so-called "stability programme" will be sent to parliament for debate on April 23-24 and then to the European Commission at the end of the month.

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http://www.globalpost.com/dispatch/news/afp/130415/france-unveil-plan-reach-2014-deficit-target