French parliament passes deficit-cutting 2015 budget

The French parliament approved President Francois Hollande's revised 2015 deficit-cutting budget on Thursday, although it remains to be seen whether the European Commission will demand further efforts early next year.

The lower house passed the budget by a show of hands. No exact vote count was immediately available, however the bill went through with a majority of votes from ruling Socialist Party lawmakers despite abstentions among some backbenchers.

Mr Hollande initially proposed to deliver €21 billion in savings next year but subsequently added €3.6 billion in a plan to bring the country’s public deficit down from 4.4 per cent of gross domestic product in 2014 to 4.1 per cent in 2015.

The budget has been at the centre of a stand-off between the European Commission and France after Paris broke a promise to bring its deficit down below an EU-mandated ceiling of 3 per cent of GDP by 2015, saying it needed a further two years to do so.

With the extra €3.6 billion in savings, France cut its 2016 and 2017 deficit targets last week, with the shortfall due to hit 3.6 per cent of GDP in 2016 and 2.7 per cent the year after.

The Commission is to rule in March 2015 whether France has implemented the economic reforms needed to improve its public finances, competitiveness and growth prospects, or whether it will face unprecedented penalties including possibly fines.

Reuters