EU commission sees France missing deficit target

PARIS: European Commission estimates to be published on Friday forecast France will post almost no economic growth this year and overshoot its fiscal deficit target, French radio RTL reported on Wednesday.

But President Francois Hollande insisted France would not make up for a shortfall in finances with kneejerk fiscal austerity that may further weaken an economy already on the brink of recession.

Hollande has acknowledged French growth would likely fall short of his government's official forecast of 0.8 percent, putting its 2013 deficit target of 3 percent of gross domestic product out of reach.

But the government has been eagerly waiting for the Commission forecasts before setting out a new target.

RTL reported the Commission would forecast French growth of 0.0-0.1 percent this year and a deficit of 3.6 percent of GDP.

The Commision, the European Union's executive arm, was not immediately available for comment on the report.

Hollande's government put its fiscal credibility at stake by insisting it would meet its deficit target until only recently as economists warned the economy would not grow fast enough for that to be possible.

With the second-highest public spending as a percentage of output in the OECD after Denmark, France faces increased pressure to cut state largesse to show that it remains committed to restoring fiscal order.

Hollande insisted that although the public finances needed to be reined in he would not pile austerity on top of already unprecedented belt-tightening.

"This is about improving the public accounts and at the same time boosting growth by improving the competitiveness of companies," Hollande said in a speech.

"This is not about adding measures on top of other measures because we don't want to be plunged into austerity," he added.

EU Economic and Monetary Affairs Commissioner Olli Rehn has opened the door to giving countries more time to meet their deficit targets as long as they keep their belt-tightening efforts up.

However, some other euro zone governments are uneasy about the prospect of cutting France more slack to reduce its deficit.