France needs €43 billion to meet 2013 deficit targets

France could be the next European country to face economic stumbling blocks with up to 10 billion euros needed to be cut this year and another 33 billion by 2013 in order to meet European deficit targets, auditors say.

Responding to President Francois Hollande’s request for a thorough review of state finances, the Court of Auditors - a quasi-judicial body responsible for overseeing public accounts - said on 2nd July, that a revenue shortfall was threatening deficit goals.

While in line with economists’ predictions, the figures leave Hollande with the tricky task of explaining to voters, seven weeks after he took office promising an end to austerity, that sweeping costs cuts will be inevitable after all.

The government plans tax rises on the wealthy and on companies to adjust the 2012 budget, but unpopular welfare and civil service job cuts are likely next year.

The main obstacle to Hollande’s pledge to honour France’s European Union deficit targets of 4.5 percent of GDP this year and 3.0 percent in 2013, the court said, was a revenue shortfall due to over optimistic assumptions on economic growth.

The crunch year for public finances would come in 2013, the auditors said, when the government must make the biggest step in deficit reduction in the face of weak growth, a persistent euro zone crisis and rising domestic anger over high unemployment