France sticks to deficit targets despite extra spending: Sapin

[PARIS] France will stick to its target to cut the budget deficit below 3 per cent of economic output next year for the first time in a decade despite 5.7 billion euros in extra state spending, Finance Minister Michel Sapin said on Tuesday.

Outlining the 2017 budget seven months from a presidential election, Mr Sapin warned candidates promising to slash taxes that they could put France's hard-won credibility at risk.

"I would like to remind those who promise immediate tax cuts while leaving spending cuts for later that France's credibility is at stake," Mr Sapin told a news conference.

The main conservative candidates for the presidency have programmes that would break the country's pledge to bring its budget deficit below the eurozone's 3 per cent limit in 2017, setting up a clash with partners - especially Germany - that resent its serial offender record.

"It would be tragic that all our efforts be irresponsibly squandered in a few months," the minister said.

Mr Sapin said the extra state spending decided earlier this year to beef up security after bloody Islamist attacks, raise teachers' pay and put more unemployed people in training, will be fully offset by savings or tax measures.

As previously announced, some 5 billion euros will come from delaying a cut in corporate tax and maintaining another tax on companies' sales that was due to expire.

Lower borrowing costs, mainly due to the European Central Bank's bond-buying programme, will help save 1.2 billion euros.

REUTERS