The party’s over and the guests have finally gone. Now, it’s time to tackle the washing up.
After weeks of hosting summits in Brussels, then Cannes, designed to sort out everyone else’s problems, French President Nicolas Sarkozy returned to Paris at the weekend to tackle the economic battle on his home front.
The French Cabinet will hold a belated weekly meeting on Monday and the agenda is likely to be dominated by the nation’s home-grown austerity plans. The timing couldn’t be more apt, given the precarious nature of Greece (and France’s $56 billion exposure to it.)
If there’s one thing France has in common with its smaller, weaker eurozone neighbours - like Greece - it is that with growth stalling it is becoming increasingly difficult for such countries to keep to their deficit targets.
Just last month, France cut its growth outlook to 1 percent for next year from 1.75 percent. That figure had already been revised downwards from 2 percent during the summer. As growth slows, so the revenues otherwise needed to pay down the deficit also flow less freely.
This is why France has said it will need to push through an additional $8 billion to $11 billion worth of extra austerity, to make sure the public shortfall does not exceed its targeted 4.5 percent of GDP.
You see, France must show it is serious about tackling its finances - or else it could find itself losing its coveted AAA rating.
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