France is likely to miss its budget deficit forecast this year

France is likely to miss its budget deficit forecast this year

A view shows in Paris the Economy and Finance Ministry on the day the government unveils budget plans for 2019, Bercy Economy and Finance Ministry, in this city.

PARIS Reuters - The budget oversight panel revealed that the France public sector is likely to come down bigger than expected this year and any extra tax revenue should go towards decreasing the public debt, said on Wednesday.

The government is forecasting a budget deficit of 8.4% of gross domestic product this year, falling to 4.8% next year as the economy recovers from the coronavirus crisis and support measures are withdrawn.

The High Council for Public Finances, an independent body mandated by law to judge whether the economic assumptions underpinning the government's budget are plausible, said the job market was recovering more strongly than forecast.

As a result of the extra income that would result, the 2021 public deficit could be less degraded than anticipated by the Government, the body said in its judgment on the 2022 budget plan presented to cabinet on Wednesday.

In 2022, tax income related to wages could also be underestimated, it said, adding that it was therefore not in a position to say whether the 2022 deficit forecast was possible.

With public debt expected to peak at 116% of GDP this year, the body said any extra income should be devoted to cutting debt to keep the public finances on a sustainable path.