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EU overtly pessimistic about France's deficit control

EU

The EU's forecasts on France's finances are too gloomy, French Finance Minister Christine Lagarde said.

Lagarde made the comments in reaction to the European Commission's latest economic forecast, which expected France's public deficit to reach 2.9% of its GDP this year.

Lagarde said in a TV interview that the European Commission has not taken account of the impact of the French government's recent announced actions to reform the economy, referring to the draft law for the “modernization of the economy,” which is designed to curb price pressures by encouraging competition in the retailing industry.

Lagarde said she has reached a consensus with EU Economic and Monetary Commissioner Joaquin Almunia, who agreed to reconsider the draft law's potential to boost the French economy.

The European Commission Monday warned in its spring Economic Forecast that the French economy will grow by 1.6% while its public deficit is expected to hit 2.9% of the GDP this year. The growth rate next year will drop to 1.4% while the public deficit will widen to 3%, the maximum allowed under EU rules, the Commission said.

The French Finance Ministry said Monday it will not change the government's forecasts for economic growth and deficit in 2008 and 2009, because a series of reform plans will boost the country's economic growth by at least 0.3%.

According to the French government's previous predictions, the economy will grow by between 1.7% and 2.0% this year, with the public deficit accounting or 2.5% of the GDP. (Xinhua)

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