June 22, 2009

French budget deficit balloons

French Budget Minister Eric Woerth said the budget deficit in France would top 7 percent of the gross domestic product for this year and next.

In March, the government said the deficit would reach 5.6 percent of the GDP, the EU observer reported Monday.

In a television interview, Woerth said the rising deficit is both the cost of the crisis and the price of recovery.

In total dollars, the budget deficit is expected to reach $187 billion this year, including a $27.7 billion social security deficit, the newspaper said.

With the economic downturn, corporate taxes are expected to come in at roughly half of a normal year, Woerth said.

He also argued the government had to spend to dig its economy out of the recession.

Unemployment in France is expected to top 10 percent this year, more than 3 percentage points above the pre-recession mark, which was below 7 percent.

Woerth, however, said the economy was likely to grow 0.5 percent in 2010, outperforming many other EU states.