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France public debt to hit record in 2014 | |
(34 minutes later) | |
France has said its public debt will hit a record 95.1% of GDP in 2014, above previous estimates, and up from 93.4% in 2013. | |
The figure was revealed as the country unveiled its budget for next year. | |
But it said debt should fall back in 2015, and repeated its aim to bring the public deficit below 3% that year, the EU's deadline for doing so. | |
The government also said there will be some tax increases for households, but other tax reductions for businesses. | |
In addition, the budget focuses on tightening public spending, with some 15bn euros (£12.6bn) in savings planned, as part of a plan to cut some 18bn euros off the deficit. | |
But debt servicing costs will rise to 46.7bn euros, compared with 45bn euros in 2013. | |
The 2014 budget is based on a growth forecast of 0.9%, lowered from a previous 1.2% forecast, with just 0.1% in growth forecast for this year. | The 2014 budget is based on a growth forecast of 0.9%, lowered from a previous 1.2% forecast, with just 0.1% in growth forecast for this year. |
'Recession' | |
But an economist has warned that next year's growth figure was no cause for optimism. | |
"We can't talk about a recovery as long as economic growth is around 1%," said Eric Heyer, an economist with the French Observatory for Economic Forecasts, | |
"Since today, we produce less than five years ago, we are still in recession. That's the real definition of a recession. | |
"The real rebound will be when we have a production level well above 2007 and when the economy has started to create jobs again. That's not in the government's scenario." | |
In other measures, there will be a change in corporate tax policy, with a new levy being introduced based on operating profits. | |
The much-heralded 75% tax rate on salaries of more than 1 million euros a year will be introduced. | |
However, this tax will be paid by firms rather than employees. | However, this tax will be paid by firms rather than employees. |
France is the eurozone's second largest economy after Germany. | France is the eurozone's second largest economy after Germany. |
Meanwhile, France will issue 174bn euros in medium and long-term debt in 2014, compared with an estimated 169 billion euros this year. | Meanwhile, France will issue 174bn euros in medium and long-term debt in 2014, compared with an estimated 169 billion euros this year. |
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