It's a nightmare Monday for French President François Hollande. After a weekend characterized by defeat of the socialists in the municipal elections – who will also bring with him a government reshuffle –, this morning the National Institute of Statistics Insee announced that the country's public deficit stood at 2013% of GDP in 4,3.
The figure is lower than the 4,9% recorded the previous year, but the decrease is not enough to respect the agreements with Brussels, given that Paris had pledged to its European partners to reduce its deficit to 4,1%. The public debt stands at 90,6%, against the 93,4% estimated by the Executive, while the GDP grew by 0,3% in the last quarter of the year (+0,8% on an annual basis), in line with expectations.
The disappointing deficit outcome implies the need to a new corrective maneuver, otherwise France will fail in its fundamental objective in terms of public finances: to bring the deficit-GDP ratio back to 3% by next year, the limit prescribed by the Maastricht agreements.
Alternatively, the Government will have to ask for more time to get there, which could greatly irritate the European Commission, which has already granted France a two-year moratorium to comply with the parameters. The specter in the background is that of an infringement procedure for excessive deficit.
