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France open to letting deficit reduction target slip amid tariff uncertainty
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France open to letting deficit reduction target slip amid tariff uncertainty
Apr 4, 2025 1:26 AM

PARIS, April 4 (Reuters) - French Finance Minister Eric

Lombard opened the door on Friday to letting the deficit

reduction target slip this year, ruling out extra spending cuts

and tax increases to offset a potential shortfall in growth.

Speaking to BFM TV, Lombard said things were uncertain and

it was necessary to wait to see in the coming weeks how

negotiations with the United States would go over recently

announced tariffs to have a better idea of its impact on the

French economy.

If tariffs on the European Union - announced on Wednesday to

be 20% on EU imports, with higher levels on certain French

territories - were maintained, Lombard said: "in that case,

revenue would decrease, the GDP would decrease, which would -

without getting too technical - degrade the level of the

deficit, and I think in that case, to protect the French people,

I think we must accept that."

The central bank for the euro zone's second largest economy

had forecast growth of 0.9% this year, down from 1.1% last year,

but has revised that expectation downwards to 0.7%.

France has been aiming to trim its deficit to 5.4% of

economic output this year from 5.8% last year as a step toward

bringing its shortfall in line with a European Union ceiling of

3% by 2029.

But Paris still has one of the biggest fiscal gaps in the EU

and, unlike other big European countries, it will not be able to

bring its debt burden to pre-pandemic levels by the end of the

decade.

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