France needs long-term spending rule to restore finances – OECD

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PARIS, Nov 18 (Businesshala) – France needs a multi-annual spending rule to get its post-COVID public finances under control, the Organization for Economic Co-operation and Development said on Thursday as it raised its growth forecasts. has been extended.

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The recovery of the euro zone’s second-largest economy has exceeded most expectations this year as consumer spending returns after a massive vaccination campaign.

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The OECD, in an in-depth report on the French economy, said growth is now expected to reach 6.8% this year and 4.2% in 2022. It had earlier forecast 6.3% this year and 4.0% next year.

Government support measures for the economy during the crisis left public finances severely strained and debt at record levels, such as France planning large investments to decarbonize the economy and rising costs from an aging population. is facing.

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With public spending in the world already at around 60% of GDP, the OECD said France needed a multi-annual spending rule, which it said would prevent deficits in other high-spending countries such as Sweden. had a positive track record.

It said it would force the government to rationalize spending with a thorough review to ensure that money is well spent, which the OECD said has always been the case given the myriad of public bodies at various levels. Does not happen.

While Finance Minister Bruno Le Maire has supported a multi-year spending rule and even spelled it into the constitution, President Emmanuel Macron has so far not come out in favor or against.

The OECD also said that France’s pension system was too fragmented and spending too much. Macron postponed reform plans for the past week, with the presidential election due next April.

As France, like many European countries, lags behind on its CO2 reduction targets, the OECD said it needs to promote not only green investment, but phasing out tax breaks that benefit polluters and become more environmentally friendly. raises taxes.

Macron scrapped a carbon tax in 2018 and launched a broader anti-elitist movement in the name of high-visibility yellow vest protesters, after helping spark waves of the most violent street demos in decades. (Reporting by Leigh Thomas; Editing by Toby Chopra)

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