OPPOSITION CLAIMS that the French president is holding back austerity measures until after the spring election have been strengthened after the country’s spending watchdog said the government would miss its own deficit targets without much deeper cuts.
Nicolas Sarkozy’s government introduced two austerity packages last autumn but has insisted no further measures will be necessary this year.
In its annual report, France’s court of auditors said the government’s target of reducing the deficit to 4.5 per cent of GDP this year would be “difficult to reach” without new spending reductions.
The aim to cut it to 3 per cent in 2013 would be “even more difficult to reach” as it was based on overly optimistic projections for growth and tax receipts, it added.
The court criticised the government’s approach to deficit reduction, saying its record of unveiling new austerity packages every time growth forecasts declined damaged confidence in the country.
Mr Sarkozy has pledged to balance the budget – a feat last achieved by a French government almost 40 years ago – by 2016, but his austerity packages have so far largely shielded people on average and low incomes. The European Commission has said France’s growth projections are too optimistic, and critics allege the most severe cuts are being held back to avoid damaging Sarkozy’s chances of re-election in three months.
Charles Beigbeder, a spokesman for reform from Mr Sarkozy’s UMP party, tweeted last November that the “real austerity plan” would come after the election.
The central government’s 2011 shortfall came in at €90.8 billion, €4.5 billion better than forecast in last year’s budget, meaning France should comfortably beat its overall state deficit target for last year of 5.7 per cent of GDP.
The court’s president, Dider Migaud, welcomed the “encouraging” efforts made by the government to reduce the deficit by 0.5 per cent of GDP last year, but said: “It should have been double that.”
On balancing the budget, Mr Migaud said, “The longest stretch of the road lies ahead in 2013 and 2014.” He invited all candidates for the presidency to set out “detailed, credible programmes rooted in realistic hypotheses”.
Valérie Pécresse, the budget minister, said the report was based on out-of-date figures.
“What we are saying on the public finances is very much of the here and now,” she said, adding that the report was “obsolete”.
France has one of the highest levels of public spending in western Europe, at about half of GDP. “The recurrent deficits of our social security system, which have no equivalent elsewhere in Europe, are anomalies and must be eliminated,” Mr Migaud said, adding this should come from spending cuts rather than raised taxes.
“Our country has to escape as quickly as possible from the dangerous position it finds itself in because of its debt levels.”
François Hollande, the socialist candidate leading Mr Sarkozy in opinion polls, pledged to reduce the public deficit to 3 per cent of GDP by 2013, to reach a balanced budget within five years and to ease France’s debt burden. He says he would do this mainly by raising the upper income tax rate and abolishing tax breaks for the rich.