France overshoots 2023 budget deficit target

France’s public sector budget deficit widened last year by more than the government planned, official data showed on Tuesday, putting pressure on Paris as it struggles to keep its deficit reduction plans on track.

Statistics agency INSEE said the 2023 public accounts showed a fiscal shortfall of 5.5% of economic output last year, up from 4.8% in 2022 and significantly more than the government’s target for 4.9%.

Though the government had warned in advanced the deficit would be worse than expected, it is still bad news because it means further additional budget savings need to be found this year to meet a 2024 deficit target of 4.1%.

The government has already flagged 10 billion euros ($10.9 billion) in extra budget cuts this year and said it might need to pass legislation mid-year to come up with additional savings.

Finance Minister Bruno Le Maire has been eager in recent weeks to show France’s remains committed cutting the deficit to less than an EU limit of 3% by 2027 with rating agencies due to update their ratings in April and May.

INSEE also said France’s public debt stood at 110.6% of GDP at the end of the fourth quarter of 2023, versus111.9% at the end of the fourth quarter of 2022.
Source: Reuters (Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta)