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French budget deficit forecast to hit 9% of GDP, a postwar record

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Issued on: 14/04/2020 – 10:23Modified: 14/04/2020 – 10:34

The French government's budget deficit is set to hit a postwar record of nine percent of economic output this year due to the prolonged coronavirus lockdown, the budget minister said on Monday in the second revision in less than a week.

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"Our country has never seen such a deficit since World War Two," Gérald Darmanin told France Info radio as he announced the latest figure, up from the 7.6 percent forecast only last week.

The budget minister was speaking a day after President Emmanuel Macron extended a nationwide lockdown over the coronavirus pandemic until May 11.

The massive relief effort for bars, restaurants, hotel, shops and other businesses closed during the lockdown will inevitably weigh on France's budget deficit, Darmanin said.

"Each day, each week of confinement… is worsening our public finances," he said, adding that France's debt pile would soar to 115 percent of GDP, up from just under 100 percent last year.

Both forecasts are well above the limits set by the EU's Stability and Growth Pact, which call for deficits to be capped at three percent of GDP, and a debt-to-GDP ratio of 60 percent.

But EU officials have already signalled the rules will be suspended as governments scramble to contain the economic fallout and prevent mass bankruptcies and layoffs.

🇫🇷🛍🏭French business groups have welcomed President Macron's announcement that some shops and businesses will be able to re-open after 11th May, but economic recovery will take a long time. I've been looking into the announcements for business: 📺@France24_en #F24 pic.twitter.com/5ejUZkGv16

— Stephen Carroll (@newstephen) Read More – Source

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