The defeat of the right in regional elections on Sunday worried some economists. "The political situation, with a government clearly weakened, is not conducive to the development of structural reforms painful" but necessary to reduce debt, said Gilles Moec, economist at Deutsche Bank in a note. But "in the current environment, the political uncertainties could traduirent by the rising cost of debt financing. Clearly, higher interest rates.
The France is among the three countries in the euro area with Italy and Germany, which show that in 2010 the budget as balanced. Official projections, also considered optimistic by the European Commission, expect a budget deficit of 8.2% of GDP.And for the moment, Paris' delay in entering the field of discipline, "the report said the economist at Deutsche Bank.
Pension reform
To reduce the deficit, the French government will continue not to replace a staff of two and intends to tackle the pension system. "We believe that the pension reform will result, economists said the German bank. "Public opinion has changed on this subject in recent years" for an overhaul of the system.
Certainly, the defeat of the regional majority does not challenge these policies. But more is required to reduce deficits. "Reforming the pension system and reducing the number of staff may be insufficient, while the government refuses to raise taxes, except in very specific cases of tax loopholes," lamented Gilles Moec.
Still, "the government had never officially announced policy of rigor before the regional elections," said Eric Heyer, deputy director of the Office of the French Economic Conditions (OFCE). "In fact, most of the effort requires a strong control of public spending."
After defeating regional, the next election, the presidential election in 2012 will dampen she also wishes to reduce the deficit? "It is not clear," says Gilles Moec. "The question on debt and deficits has become a major concern of French. It could be paying politically difficult to pursue a policy of austerity at a time complicated. "
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