French finances too optimistic, public auditor warns
- Annual report from the Cour des Comptes says projected savings and growth have been overestimated
The French government is too optimistic about the outlook for its public finances this year, overestimating growth and planned budget savings, France’s public audit office said on Wednesday.
President Emmanuel Macron’s government lifted its 2019 public deficit target in December to 3.2 per cent of economic output, overshooting the European Union’s 3-per cent limit.
It raised the target after Macron announced an €11 billion (US$12.6 billion) package of concessions to anti-government protesters who had led some of the worst street violence in Paris since the 1968 student demos.
“This worrying scenario for the public finances is moreover affected by multiple weaknesses,” the Cour des Comptes said in its annual report.
The audit office said in particular that the deficit target was built on an outdated growth forecast of 1.7 per cent which did not take into account recent weak economic data.
It said the growth outlook also failed to reflect the impact of increased savings the government is hoping to come up with to offset the cost of the concessions package.
The audit office urged the government to revise its growth outlook “as soon as possible” and said that spending cuts needed to be stepped up in order to push ahead with planned tax cuts.
The “yellow vest” protests broke out in mid November originally over since-scrapped fuel tax hikes, but quickly morphed into a broader movement against Macron and his reform push.
The protests, named after the fluorescent vests French drivers must keep in their cars, saw cars burned and windows smashed in central Paris and other cities.