French Government Abandons Deficit Target

Did anybody really believe they would meet it?

Poorer-than-expected economic news completely outed what was already the worst-kept secret in France. On Feb. 14, members of socialist President François Hollande's government admitted they wouldn't meet their 2013 target of keeping the budget deficit to 3% as previously (and incessantly) promised. That avowal was hardly a shocker: until now, the only people taking the 3% pledge seriously were the same French government officials who continued citing it despite increasingly dire economic statistics. But with figures for the fourth quarter of 2012 showing growth levels worse than feared, even Team Hollande conceded that meeting the 3% deficit objective had become the stuff of fantasy.

"We won't be exactly at 3% for 2013, I believe, for the simple reason that growth in France, Europe and in the world is weaker than expected," socialist Prime Minister Jean-Marc Ayrault said after official stats indicated the French economy shrank by 0.3% in Q4 2012, while growth across the euro zone was expected to decrease to around 0.6%. "[But] the objective — and it will be met — is 0% [budget] deficit by the end of [Hollande's] five-year term, and what's important is trajectory toward that."