France’s 2021 budget deficit is lower than expected at 7% of GDP – minister

French Prime Minister Jean Castex, Economy and Finance Minister Bruno Le Maire and Deputy Minister of Public Action and Accounts Olivier Dussopt, wearing protective masks, leave after the first weekly cabinet meeting of the year at the Elysee Palace in Paris, France, January 5, 2022. REUTERS/Sarah Meyssonnier

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PARIS, Jan 16 (Reuters) – France’s stronger-than-expected economic recovery last year means the public sector budget deficit is likely to be better than expected, the budget minister said in an interview published on Sunday.

The government had built its budget planning on expectations of economic growth of 6.25% last year, but the most recent indications indicate that this figure was probably around 6.7%.

“The strength of our growth is reflected in more tax revenue than expected and we have spent less because businesses are using less emergency aid,” Public Accounts Minister Oliver Dussopt told Le newspaper. Sunday newspaper.

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“Any additional revenue goes entirely to deficit reduction, even without sacrificing any measures to stimulate the economy or support purchasing power,” he added.

The government is injecting 100 billion euros ($114 billion) into the economy, mainly in public investments, as part of a pandemic recovery plan and has also had to deploy emergency aid for low-income households last year struggling with soaring inflation.

Despite stimulus spending and income support, the 2021 government deficit is now expected to reach around 7% of economic output, he said. The government had previously estimated the deficit at 8.2%.

In this context, the Ministry of Finance was comfortable with its forecast of a further decline in the deficit this year to 5% and a return below the European Union’s deficit ceiling of 3% in 2027, said Dussopt.

The stronger-than-expected recovery means the central government deficit is expected to be better than expected at 34.5 billion euros to 171 billion euros, he said.

($1 = 0.8761 euros)

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Reporting by Leigh Thomas; edited by Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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