France says deficit to be reined in more slowly

Reuters

* Slippage in 2014 pushes up long-term forecasts

* Public finances facing scrutiny from EU partners

PARIS, Oct 1 (Reuters) - France will bring down its publicdeficit more slowly than previously expected, according tolong-term forecasts released on Tuesday.

President Francois Hollande's government, which facesscrutiny of its public finances from its European Unionpartners, has already raised its estimate for next year's deficit, because recovery is proving weaker than hoped.

That slippage means less headway will be made against thedeficit in the following years, leaving a shortfall of 1.2percent of output at the end of Hollande's term in 2017, insteadof 0.7 percent as expected only six months ago.

The numbers, however, remain far below the deficit to GDPtarget required by the European Union.

Hollande had originally hoped to produce France's firstbalanced budget since 1974 by the end of his five year-term in2017, but has had to back track. The government now sees adeficit of 3.6 percent of GDP next year, from a previous 2.9percent.

However, his government points to a steady improvement inthe structural deficit, which excludes swings in the businesscycle, as evidence of its determination to rein in its publicfinances. It is now forecast to stand at 0 in 2017.

EU Economic and Monetary Affairs Commissioner Olli Rehn, whovisits Paris on Tuesday and Wednesday, last week put aside anyfrustration with the pace of French reforms, telling FinanceMinister Pierre Moscovici his budget plans were on track.

For a detailed factbox of the new and old forecasts:

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