French Finance Minister Thierry Breton today scaled back the government's growth forecast for this year to around 2.0 per cent from 2.0-2.5 per cent previously.
"We are fighting for growth of around 2 per cent," Mr Breton said, adding he expected growth to be at a pace of 2.0 to 2.5 per cent in the second half of 2005 if oil prices do not continue to rise.
"We must have the courage to say simply but gravely that France is living beyond its means," he said, referring to France's public deficit. Mr Breton said the bottom of the previous growth forecast range "now becomes the ceiling".
The OECD said recently it saw French growth at 1.4 per cent in 2005 and 2.0 per cent in 2006. Mr Breton said France had seen some encouraging signs of a recovery in recent months, particularly concerning investment, but he added: "We have to be very attentive to oil prices."
He said the "euro has come back to more acceptable levels." Mr Breton said France would have to aim for growth around 3 per cent to deal with its debt problem and said rigorous control of public spending was needed to limit the deficit.
France has breached the European Union's deficit ceiling of 3.0 per cent of gross domestic product for three years running, but the government has promised to cut the public deficit below the ceiling this year.