France's budget deficit will exceed 5 percent of gross domestic product in 2009, with the economic crisis likely to be long and hard, French Prime Minister Francois Fillon said on Tuesday. Fillon told Europe 1 radio that the government had slashed its economic forecasts for this year and confirmed that France's deficit would fly above the three percent of GDP limit imposed by the European Union.
"The deficit will certainly be a bit more than five percent (in 2009)," Fillon said. "What we are trying to do now is conserve a trajectory for public finances that will bring us back to a deficit of under 3 percent in 2012.
This means we are going to have to continue the policy of reducing public spending," he added. France last revised its forecasts in November, when it predicted a deficit of 3.1 percent against a previously given 2.7 percent. The latest figure shows how swiftly public accounts have deteriorated in the face of the global slowdown. "Pretty much everyone agrees it will be a long crisis and a tough crisis," Fillon said.
He confirmed that the government was now predicting the economy would contract by between 1.0 to 1.5 percent in 2009 and expected some 300,000 jobs to be lost in the private sector. The previous forecast was of growth of 0.2 to 0.5 percent. He added that inflation was expected to continue to fall in the months ahead. "All our forecasts for inflation point to very, very feeble inflation. Close to zero, even negative in some months.