OECD urges France to slash deficits

April 28, 2009

, PARIS, April 28 – The Organisation for Economic Cooperation and Development on Tuesday urged France to rein in its ballooning public deficit as soon as a recovery is underway, using spending cuts instead of tax hikes.

France has said it expects its deficit to rise to 5.6 percent of gross domestic product (GDP) this year and remain at 5.2 percent next year.

But the OECD estimated in a report on France that the deficit this year would actually be 6.6 percent and would rocket up to 8.3 percent in 2010.

Under EU rules, France\’s deficit should be below three percent of GDP.

"Once the recovery is well underway, it will be necessary to urgently implement a programme for reducing the public deficit," the OECD said.

"Given the already very high level of taxes and compulsory contributions, the effort … will have to rely essentially on government spending cuts."

The OECD also urged France to increase employment opportunities for older workers, improve productivity to boost business and to consider limiting the scope of certain family allowances.

Overall, the OECD report said, the recession in France had been less painful than in other countries because of a strong social safety net.

But the OECD also warned that France depended on a global recovery to pick itself up and said its public finances would end up "in a serious condition."


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