France says deficit to be reined in more slowly

October 1, 2013

* Slippage in 2014 pushes up long-term forecasts

* Public finances facing scrutiny from EU partners

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

President Francois Hollande's government, which faces scrutiny of its public finances from its European Union partners, 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 the deficit in the following years, leaving a shortfall of 1.2 percent of output at the end of Hollande's term in 2017, instead of 0.7 percent as expected only six months ago.

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

Hollande had originally hoped to produce France's first balanced budget since 1974 by the end of his five year-term in 2017, but has had to back track. The government now sees a deficit of 3.6 percent of GDP next year, from a previous 2.9 percent.

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

EU Economic and Monetary Affairs Commissioner Olli Rehn, who visits Paris on Tuesday and Wednesday, last week put aside any frustration with the pace of French reforms, telling Finance Minister Pierre Moscovici his budget plans were on track.

For a detailed factbox of the new and old forecasts: