France's budget deficit hits record high
France's public deficit reached 7.5 per cent of gross domestic product (GDP) in 2009, its highest level ever and more than twice the maximum agreed for members of the European Union. The French budget deficit hit 144.8 billion euros last year, according to figures released by national statistics office Insee on Wednesday.
The increase soared to 80.1 billion euros more than 2008's.
Insee attributes France's growing deficit to a sharp drop in government revenues and a simultaneous increase in public spending.
Over the same period, France's public debt rose to 1.489 trillion euros or 77.6 per cent of GDP, up from 67.5 per cent in 2008.
Insee forecasts that debt will increase again in 2010, reaching 83.2 per cent of GDP this year and 87.1 per cent in 2012. Debt levels will not begin to fall until 2013, according to the statistics office.
Under the 1992 Maastrict Treaty, all members of the European Union are obliged - in theory - to keep their public deficit under three per cent of their total output, in order to protect the stability of the euro.
France's soaring budget deficit could make it liable for EU-imposed economic sanctions, although imposing such measures would be politically difficult in the current economic climate.
Many countries struggled to meet the EU targets even before the financial crisis in 2008, and since then public deficits have rocketed across the continent. Greece's public deficit in 2009 stood at 12.7 per cent of GDP.
The EU’s Growth and Stability Pact forbids countries from having public debt higher than 60 per cent of Gross Domestic Product. The public deficit of eurozone members, or new borrowing per year, cannot be higher than three per cent of GDP. Greece is not the only eurozone member with problems. Here’s how other European countries are peforming:
Greece: Public deficit: 12.7 % of GDP (in 2009); Public debt: More than 300 billion euros, or 125% of GDP (2010 forecast); Unemployment rate: 9.7%.
Germany: Public deficit: 5.5 % (2010 forecast); Public debt: 76 %; Unemployment rate: 8.6 %.
United Kingdom: Public deficit: 12.7 % (2009); Public debt: 80.3% (2010 forecast); Unemployment rate: 7.8%.
Spain: Public deficit: 11.4 % (2009); Public debt: 66.3% (2010 forecast); Unemployment rate: 19.5 %.
Portugal: Public deficit: 9.3 %; Public debt: 84.6% (2010 forecast); Unemployment rate: 10.4%.
Italy: Public deficit: 5.3 % (2010 forecast); Public debt: 115.8 %; Unemployment rate: 10 %.
Ireland: Public deficit: 14.7 % (2010 forecast); Public debt: 82.9% (2010 forecast); Unemployment rate: 13.3%.
France: Public deficit: 8.2 % (2010 forecast); Public debt: 83.2 % (2010 forecast); Unemployment: 10 % (fourth quarter 2009).