From The Wall Street Journal:
Government Eyes More Savings, Fewer Tax Increases
By William Horobin | September 11, 2013, 9:53 a.m. ET
PARIS—France’s government said Wednesday it will miss its deficit targets this year and next due to a weaker-than-expected economic recovery.
Finance Minister Pierre Moscovici said at a news conference that the public budget deficit will be 4.1% of economic output this year instead of 3.7%, and 3.6% in 2014 rather than 2.9%.
Mr. Moscovici said the new deficit targets will help economic growth by not inflicting austerity on the economy, which the government forecasts will grow only 0.1% this year. He said growth will accelerate to 0.9% next year, while the government was previously banking on 1.2%.
Mr. Moscovici said the government is shifting its focus toward spending cuts from tax increases. It is now targeting €15 billion ($19.90 billion) in extra savings and about €3 billion in tax increases in next year’s budget, having previously said it would target €14 billion in savings and around €6 billion in tax increases.
A little more at the link.
But, after a year under Socialist President François Hollande, and the French government’s stimulative policies, the economy will grow by about 0.1% this year. France will back off, slightly, to spend a bit less and cut back on planned tax increases, but it’s pretty obvious that what the Socialists said was the way out of the economic doldrums was not the way out. Monsieur Hollande and his policies have produced virtually no growth at all, and saddled the government with more debt.
We tried it here, as well, and what did we get: a new normal where the official unemployment rate is slowly dropping not due to enough jobs being created but due to people dropping out of the workforce, and thus not being counted as unemployed, and our economy is growing, and growing faster than France’s, but still far too slowly:
Our second quarter GDP growth was a modest 2.5% over the second quarter of 2012, but that followed 0.1% in the fourth quarter of 2012 and 1.1% in the first quarter of this year.
Well, there really is a new normal arising, but it’s not the new normal that most people talk about. The new normal has to be our country living within the means justified by our production. If we continue to import money to live better than we have earned, it has to collapse eventually.