France's budget deficit widened in the first half of 2005, figures showed today, dealing a blow to the government's efforts to comply with European Union budget rules.
A fall in tax revenues and a rise in spending compared with the first six months of 2004 boosted the deficit to €35.7 billion from €32 billion in the year-ago period.
Economists were sceptical about whether the government could achieve its goal of bringing the shortfall below the EU limit of 3 per cent of GDP this year. France has surpassed the EU threshold every year since 2002.
A breakdown of the deficit figures until the end of June showed spending rose by 1 per cent to €148.3 billion from the first six months of last year, while revenues fell 0.5 per cent to €124 billion euros.
The Treasury special accounts, which track the balance of inflows and outflows for targeted revenues and outlays such as receipts from local government, registered a deficit of €11.4 billion, up from €9.8 billion in the first half of 2004.
Finance Minister Thierry Breton said on Sunday the government was still aiming for economic growth of 2 per cent this year. In June, he stressed the need for budget rigour and said France was living beyond its means.
Today's deficit figures showed a 6 per cent rise in military spending, mainly due to spending on investment.