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European Commission may give France more time for deficit target

EU economy commissioner Olli Rehn
EU economy commissioner Olli Rehn Reuters/Francois Lenoir

European Union Economic Affairs commissioner Olli Rehn on Friday said it would be "reasonable" to give France two extra years to meet the EU deficit target of three per cent of GDP.

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Rehn was reacting to a European Commission forecast that France would fall into recession this year and see its deficit rise from 3.9 per cent to 4.2 per cent.

Dossier: Eurozone in crisis

The Commission spring forecasts were pessimistic about France’s economic prospects, suggesting that unemployment will continue to rise and investment decline.

French President François Hollande pledged to meet the 3.0 per cent target after being elected last year while calling for less austerity in economic policy on a European scale.

A succession of poor economic figures have forced the government to admit that it will not reach the target as soon as it hoped.

Meanwhile, members of Hollande’s Socialist Party are pressing for tougher resistance to German Chancellor Angela Merkel’s insistence on budgetary rigour and the leaders of recession-hit southern European countries such as Spain, Greece and Italy have called for less rigour and more efforts to stimulate growth.

A proposal to concentrate on the reduction of structural deficit rather than reaching the 3.0 per cent target is to be put to EU economy ministers on 29 May, according to Le Monde newspaper.

French Finance Minister Pierre Moscovici hailed a "new doctrine" on the part of the commission.

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