The European Commission has warned that France's stability programme covering 2003-2006 will not meet EU requirements to reaching a balance, or surplus, in its budgets over the period covered by the programme.
In its assessment of the 2002 update on France's budgetary position, which comes two months after the adoption by the Commission of a recommendation to the Council to send an early warning to France on budgetary deficits, the Commission has said the updated programme is not in line with the 2002 Broad Economic Policy Guidelines.
In its assessment, issued this morning, the Commission concluded that while France's programme complies partly with the recommendations of the 2002 Broad Economic Policy Guidelines the budgetary adjustment in cyclically adjusted terms is barely 0.2 per cent of GDP.
General government finances deteriorated markedly in 2002. The updated stability programme estimates the 2002 general government deficit at 2.8 per cent of GDP, a level well above the 1.4 per cent of GDP planned in November.
As a result, it concludes, the underlying budgetary position improves by hardly 0.5 percentage points per year on average over the period 2002-2006.
The Commission has called on the French authorities to strengthen their efforts towards budgetary adjustment, in particular in 2003 and 2004.
This, the assessment says, would allow to reduce the risk for the general government deficit to breach the 3 per cent of GDP reference threshold in 2003 and to complete the transition to a position of budget balance by 2006.
A greater degree of budgetary ambition is required by France given the projected impact of aging populations after 2006, it concludes.