CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. France's "Fiscal Shock" Said To Stifle Economic Growth

France's "Fiscal Shock" Said To Stifle Economic Growth

by Ulrika Lomas,, Brussels

08 January 2014

French macroeconomics research institute Coe-Rexecode has concluded that the painful "fiscal shock," meted out by the Socialist Government in 2013, merely served to stifle any signs of economic growth in France, as the think-tank had accurately predicted in its last winter economic forecast.

Furthermore, the institute emphasized that the EUR30bn (USD40.9bn) in tax rises implemented last year failed to meet the Government's intended objective of significantly lowering the public deficit, as the tax onslaught yielded little in fiscal revenue for the state.

Indeed, preliminary estimations have confirmed that the tax barrage was – as anticipated by many experts – highly ineffective. According to Coe-Rexecode, the Government reduced the public deficit in 2013 to the tune of just 0.7 percent of gross domestic product (GDP), or EUR15bn, despite the fact that additional revenue amounted to EUR38bn. The institute maintained that the disappointing results are attributable to poor budgetary and fiscal decisions, which have proven unfavorable to growth.

Finally, Coe-Rexecode revealed that GDP increased by just EUR28bn in 2013, while primary public spending rose by EUR26bn. Despite the wave of tax rises, an increase in Government spending coupled with economic stagnation, lead to higher public debt of EUR83bn last year, it said.

Concluding, the body alluded to French President François Hollande's pledge to reduce public spending and to lower compulsory levies in France in 2014, underscoring that this new strategy will be more favorable to growth. The Government must adopt a pro-growth policy, eradicate the excesses of 2013 and make the right choices, the institute ended.

TAGS: tax | economics | gross domestic product (GDP) | budget | France

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »