French 2019 budget deficit to rise, but respect EU limit - officials

* Budget deficit seen at 2.6 pct/GDP in 2018, 2.8 pct in
* Macron's EU agenda hinges on respect for 3-pct limit
* Government sees growth at 1.7 pct in 2018 and 2019

PARIS, Sept 11 (Reuters) - France's budget deficit will rise
next year but stay below the European Union's limit of 3 percent
of economic output, according to figures given by Finance
Ministry officials on Tuesday.
Next year's budget, which is due to be published at the end
of this month, foresees the public deficit rising to 2.8 percent
of gross domestic product next year after 2.6 percent this year,
the ministry officials said.
Respecting the EU deficit limit is the cornerstone of
President Emmanuel Macron's pro-European agenda after France
flaunted the rules for a decade before his presidency.
Most of the increase in the deficit next year is due to a
long-expected, one-off effect of government plans to transform a
payroll tax credit scheme into a permanent tax cut.
The combined impact of the last rebate under the scheme for
this year and the tax cut next year amounts to a tax break of
more than 20 billion euros ($23.2 billion) for companies in
The overall deficit will remain lower than forecast in this
year's budget, which was based on projections for a shortfall of
2.8 percent in 2018 and 2.9 in 2019.
The Finance Ministry forecasts that the economy will grow by
1.7 percent in both 2018 and 2019, unchanged from the estimates
in this year's budget.
Meanwhile, public debt is expected to peak this year at 98.7
percent of GDP before easing to 98.6 percent in 2019 and
gradually fall to 92.7 percent by the end of Macron's presidency
in 2022.
The following are the main economic and financial figures in
the 2018 budget to be published on Sept. 24.
2018 2019
Real GDP growth pct 1.7 1.7
Public deficit as pct of GDP 2.6 2.8
Public debt as pct of GDP 98.7 98.6
Inflation pct 1.8 1.4
Inflation ex. tobacco pct 1.6 1.3
Real public spending growth pct 0.0 0.6
Structural deficit adjustment pct 0.1 0.3
($1 = 0.8633 euros)

(Reporting by Leigh Thomas and Yann Le Guernigou
Editing by Gareth Jones)

2018-09-11 19:00:01

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