click on chart for sharper image
The above chart shows it's silly to propose France has been involved in any sort of genuine austerity program, yet that is precisely what the French Minister of the Budget suggests.
El Economista reports France defers further budget measures because of their recessionary impact.
The French Minister of Budget, Jérôme Cahuzac, acknowledged that new taxes or spending cuts have a recessionary effect in the short term and "Given the weakness of the current situation, further efforts are ruled ask the French in 2013," said Cahuzac in an interview published by Le Journal du Dimanche.Deficit Targets Impossible
The 3% target was initially set for 2013, but the French government officially decided to postpone further action on account of the poor economic outlook.
Hollande stressed his project to achieve "zero deficit" by the end of his term in 2017, is still in place and that France's actions are "not to please the European Commission or the rating agencies, but to regain our sovereignty, alienated by markets in recent years."
France's budget deficit is currently 3.7% of GDP. Recall that budget deficits exceeding 3% is over treaty limits.
With Hollande at the Helm, any rational-thinking person understands the odds Hollande reduces the French budget deficit to zero by 2017 is roughly 0%.
Mired in a deep as well as deepening recession, France will not even reach its 3% target by the now revised 2014 date.
Hollande's statement that actions are needed "to regain our sovereignty, alienated by markets in recent years" qualifies as the joke of the day. The markets did not alienate France, but Hollande's ridiculous programs surely did.
The gig will be up as soon as the bond market targets France in a serious way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
