PARIS (MNI) – Despite dark clouds on the horizon, the French
government is sticking to its projection for 0.3% GDP growth this year,
Finance Minister Pierre Moscovici said Wednesday.
In late June, the national statistics institute Insee forecast
another flat GDP reading for 2Q and a very gradual recovery of 0.1% in
3Q and 0.2% in 4Q, enough to assure an average annual gain of 0.4%.
Since then, however, business morale has deteriorated further,
dragging down Insee’s overall sentiment index to a 34-month low in July.
This suggests that even if a contraction in activity is averted in the
first half, the second is starting on weaker footing.
In a radio interview, Moscovici conceded that he was “worried”
about growth, but defended the government’s standing forecast as
“cautious” and raised hopes for an improvement in Eurozone prospects.
“What is happing in Europe – the light in the tunnel, the
reorientation of European construction, a Europe more concentrated on
growth – is very important,” he said.
The minister said that the government was not planning a hike in
the broad-based CSG tax on earnings and investment revenues for next
year’s budget.
However, he acknowledged that a CSG hike is “one option” in the
government’s strategy to make domestic producers “more competitive” by
reducing the business and labor taxes which current finance social
outlays.
–Paris newsroom +331 4271 5540; Email: stephen@marketnews.com.
[TOPICS: MFFBU$,M$F$$$,M$X$$$,MGX$$$]
