The rising government deficits in the French-German axis: the bourgeoisie can't afford socialism

[Jurriaan Bendien <bendien@xxxxxxxxxxxx>]

BRUSSELS, July 23 (AFP) - The European Commission foresees Germany's deficit
"hitting four percent of GDP" this year, in breach of EU rules, and France's
"heading towards" that level, according to a document obtained Wednesday by
AFX News, AFP's financial news subsidiary. In a briefing note for the July
14 meeting of euro-zone finance ministers, the commission warned that German
economic growth would have to rise to two percent in 2003 for its deficit to
fall below the EU's Stability and Growth Pact's ceiling of three percent of
gross domestic product (GDP). Equally, the French deficit was unlikely to
come back below three percent of GDP in 2004, the commission said.

This means the euro zone's two largest economies could in theory face fines
of up to 0.5 percent of GDP for breaching the deficit limit for three years
in a row. The commission predicted near zero growth in Germany this year,
while the French economy would expand by slightly less than 1.0 percent. The
revelation of the internal document came as the commission was studying
clauses of the stability pact covering measures to be taken against
countries posting deficits above three percent of GDP for three consecutive
years.

The briefing note also warned that Portugal's deficit would rise back above
the limit this year, and that its 2004 target of below two percent of GDP
"is certain to be relaxed".

On Germany, the commission said: "The increase in welfare expenditures
particularly linked to unemployment and the stagnation in federal government
revenues mean that, in spite of the implementation of a consolidation
package worth around one percent of GDP..., the general government deficit
is likely to be close to four percent of GDP, way above the budget target of
2.8 percent."

It said of France that "with growth likely to fall short of one percent, the
deficit is heading towards four percent of GDP although there is still room
for a correction package". It noted that for 2004 France projects a
reduction in the cyclically adjusted deficit by 0.5 percent of GDP.
"However, in the absence of further corrections in 2003 and under plausible
growth assumptions, this is unlikely to be sufficient to achieve the
government objective of a deficit not in excess of three percent of GDP," it
said.

http://www.expatica.com/france.asp