France expects deficit could reach up to 6% of GDP in 2024, reports Les Echos

(Reuters) - France's finance and economy ministry expects the country's budget deficit could reach up to 6% of GDP in 2024 - above 5.1% planned earlier - barring new government measures, reported Les Echos newspaper on Friday.

WHY IT MATTERS:

Improving France's deteriorating public finances is a major challenge for new Prime Minister Michel Barnier who faces tough choices to cut spending, raise taxes or lose credibility with EU partners and financial markets.

The deficit has put Paris into EU disciplinary proceedings and left Barnier facing tough questions as he looks to form a new government and prepare a budget by Oct. 1, with the threat of a parliamentary vote of no-confidence hanging over him.

BY THE NUMBERS:

In April, France had raised its 2024 budget deficit to 5.1%from an earlier 4.4% target. But the finance ministry already this month warned the deficit was at risk of hitting 5.6% without corrective actions.

This means that France - along with some other EU countries - is running a deficit which is above the EU's limit of 3%.

The outgoing government has aimed to bring this deficit down below the EU's 3% limit by 2027, but the latest overshooting makes that deadline all but out of reach.

(Reporting by Sudip Kar-Gupta; Editing by Susan Fenton)