BRUSSELS: The EU set France tough new targets for the coming years on Friday to ensure it gets its budget deficit back within Brussels rules, after giving Paris until 2017 to comply.

The European Commission is keeping up the pressure two days after it extended the deadline for France, the eurozone’s second biggest economy after Germany, to get back below the EU’s ceiling of 3.0 per cent of economic output.

Brussels said France must use the extra breathing room to reach a deficit of 4pc of annual economic output in 2015, 3.4pc in 2016 and 2.8pc in 2017.

The first two years are tougher than France’s own targets of 4.1pc in 2015 and 3.6pc in 2016.

French Finance Minister Michel Sapin, speaking during a visit to Slovenia, said the country would be able to meet what he described as “demanding” but realistic targets.

The EU had disappointed fiscal hardliners when it said Wednesday that France would escape possible fines for now and get two more years to get its house in order, while Italy and Belgium were let off the hook completely.

But to reach the EU’s new benchmarks France will have to find additional savings in an economy growing very slowly, putting the government on the spot as it tries to boost growth through increased public spending.

For 2015, the Commission, the EU’s executive arm, estimated the savings required at 0.5pc of GDP, up from the current 0.3pc — that means additional savings worth at least 4.0 billion euros ($4.5bn).

But for 2016, Paris must find an even tougher 0.8pc and then 0.9pc in 2017, the Commission said in a series of recommendations following Wednesday’s deadline extension.

Published in Dawn, February 28th, 2015

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