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Last Updated: Tuesday, 4 November, 2003, 00:12 GMT
France escapes budget sanction
Euro banknotes
France has avoided sanctions over its breach of eurozone budgetary constraints by vowing fresh spending cuts next year.

French Finance Minister Francis Mer told his European Union counterparts at a meeting on Monday that he would set out further measures aimed at cutting his country's projected deficit for 2004 later this month.

His pledge was enough to deter the other finance chiefs from voting on a European Commission proposal to force France to bring its budget into line.

France has breached the EU's so-called growth and stability pact, which caps annual budget deficits at 3% of economic output, for 2002 and 2003, and is at risk of doing so again in 2004.

Paris' failure to balance its books has drawn criticism from smaller eurozone countries which have adopted painful austerity measures in order to stay within the spending limits.


They argue that the persistent deficits in the eurozone's second biggest economy risk undermining confidence in the single currency.

But France has held firm, arguing that it needs extra leeway on spending so as to jump-start its stagnant economy.

It has received strong support from Germany, the eurozone's biggest economy, itself also deep in the red.

At Monday's meeting, all but the Dutch, Finnish, and Austrian finance ministers agreed to wait until Mr Mer puts forward his new spending proposals at their next meeting on 25 November.

"We believe these suggestions made by Mr Mer are very much in the spirit of cooperation and therefore very much in the spirit and the letter of the pact," said Italian Economy Minister Giulio Tremonti, who chaired Monday's meeting.

New deficit-cutting measures reported to be under consideration in France include healthcare reforms and the cancellation of one of the country's 11 public holidays next year.

The BBC's Chris Bockman
"Under the French government's plans the Monday, currently a religious holiday, would become a work day"

France escapes deficit fine
21 Oct 03  |  Business
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08 Oct 03  |  Business
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03 Oct 03  |  Business
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11 Sep 03  |  Business
Germany drafts 'risky' budget
09 Sep 03  |  Business

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