France public debt to hit record in 2014

French President Francois Hollande French President Francois Hollande should see increased growth in 2014 compared to this year

France has said its public debt will hit a record 95.1% of GDP in 2014, above previous estimates, and up from 93.4% in 2013.

The figure was revealed as the country unveiled its budget for next year.

But it said debt should fall back in 2015, and repeated its aim to bring the public deficit below 3% that year, the EU's deadline for doing so.

The government also said there will be some tax increases for households, but other tax reductions for businesses.

In addition, the budget focuses on tightening public spending, with some 15bn euros (£12.6bn) in savings planned, as part of a plan to cut some 18bn euros off the deficit.

But debt servicing costs will rise to 46.7bn euros, compared with 45bn euros in 2013.

The 2014 budget is based on a growth forecast of 0.9%, lowered from a previous 1.2% forecast, with just 0.1% in growth forecast for this year.

'Recession'

But an economist has warned that next year's growth figure was no cause for optimism.

"We can't talk about a recovery as long as economic growth is around 1%," said Eric Heyer, an economist with the French Observatory for Economic Forecasts,

"Since today, we produce less than five years ago, we are still in recession. That's the real definition of a recession.

"The real rebound will be when we have a production level well above 2007 and when the economy has started to create jobs again. That's not in the government's scenario."

In other measures, there will be a change in corporate tax policy, with a new levy being introduced based on operating profits.

The much-heralded 75% tax rate on salaries of more than 1 million euros a year will be introduced.

However, this tax will be paid by firms rather than employees.

France is the eurozone's second largest economy after Germany.

Meanwhile, France will issue 174bn euros in medium and long-term debt in 2014, compared with an estimated 169 billion euros this year.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Business Live

  1.  
    09:11: Lord King BBC Radio 4

    "I worked very hard to make sure there were moments of laughter," Lord King says of the financial crisis and his relationship with his colleagues during the crisis. But he adds, more seriously: "I don't think you can go back and say could any one country on its own has found a way through the crisis."

     
  2.  
    09:04: Network Rail
    Railway workers on the tracks outside King's Cross, London on 27th December 2014

    Louise Ellman, the Labour MP, who chairs the Commons Transport Select, is not happy with Network Rail's engineering over-runs that led to Kings Cross and Paddington stations being closed for longer than expected at the weekend. "If Network Rail decide to close part of the system down at a busy time of year, they have to be absolutely sure it's going to work as planned and it is going to re-open as planned," she tells the Today day programme. But she declines to criticise the Network Rail chief executive for being on holiday while the work was going on.

     
  3.  
    08:48: Ben Bernanke BBC Radio 4
    A red phone

    A bit more from Mr Bernanke. He tells the Today programme that during the crisis, the mornings would start with a conference call with six or eight people sat around a "red phone sitting on a coffee table". There was a "certain emergency feeling to everything that was happening every day," he adds. No mention of batphones though.

     
  4.  
    08:37: Ben Bernanke BBC Radio 4

    Mr Bernanke adds that there were one or two US Fed meetings that were "extremely exciting". He cites the October 2008 meeting which followed the collapse of Lehman Brothers and the meeting of the G7 nations where he and Lord King "tore up the communique' and really rolled up our sleeves and thought about what we were going to do." He adds: "That was a tremendously important meeting."

     
  5.  
    08:32: Ben Bernanke BBC Radio 4
    Former Federal Reserve Chairman Ben Bernank

    Lord King has interviewed Ben Bernanke for the Today programme and they discuss the financial crisis of 2008 in which they both played a pivotal role. In a rare human moment for a central banker, Mr Bernanke tells Lord King that most US Federal Reserve meetings, while they get lots of attention, are "deadly boring". He adds: "They are very scripted and the staff do most of the work and they write the the communique' in advance of the decision making."

     
  6.  
    08:26: City Link BBC Radio 4

    More from Mr Moulton on Today: "In the intervening 18 months it [City Link] would have paid a fortune to the government in PAYE, value added tax and the like. The government will be a net beneficiary of Better Capital's investment in this company he added," he stressed. Mr Moulton added that he had lost £2m of his own money due to the City Link collapse.

     
  7.  
    08:20: City Link BBC Radio 4

    Mr Moulton, speaking to Today, points out that City Link could in fact have been closed down 18 months ago when his firm Better Capital bought it for just £1. He denies that the taxpayer will suffer because the government will now have to pay the workers' redundancy payments. "The taxpayer has certainly made an enormous amount of money out of private equity companies and their trading and success," he says.

     
  8.  
    08:07: City Link BBC Radio 4

    Jon Moulton of Better Capital, the investment firm that owns City Link, defends his firm's ownership of the now closed City Link. "We chased every possible way to save this company," he tells Today. He says the company had simply failed, and that delaying the closure over Christmas had not been an option, as trading while insolvent was a criminal offence. Could the affair have been better handled? "Not particularly, no," he says.

     
  9.  
    07:56: Network Rail boss
    Network Rail boss Robin Gisby

    The Network Rail boss who presided over what is being dubbed the Christmas trains fiasco will not receive a "golden goodbye" bonus of £371,000. Robin Gisby will leave his post as managing director of network operations early next year, a spokeswoman for Network Rail said. Mr Gisby is leaving the company at the end of February. But the decision to withhold his bonus is not linked to the overrunning engineering work at Kings Cross and chaos that ensued at the weekend.

     
  10.  
    07:43: Russian economy

    The Reuters news agency reports that Russia's economic output (as measured by gross domestic product) shrank by 0.5% in the year to November. This is the first time the economy has shrunk since since October 2009 and reflects the effects of international economic sanctions and the falling oil price.

     
  11.  
    07:29: Eurozone crisis BBC Radio 4

    Marie Diron, the senior vice president at rating agency Moody's tells Today that the probability that Greece will leave the euro is pretty small compared to 2011. She says the euro itself has remained pretty resilient to crisis events citing the failure of a Portuguese bank last year as one example. "Saying the height of the crisis is behind us does not mean that everything will be smooth from now on," she says. Eurozone growth will be weak this year and deflation, or very low inflation, remains a big risk this year too.

     
  12.  
    07:15: City Link
    A Citylink worker and van

    Better Capital explains that it had tried to sell the business but failed, and pulled the plug on the loss-making firm because keeping it going would have meant throwing good money after bad. "In light of continued substantial losses, City Link could not continue as a going concern, which resulted in the appointment of Ernst & Young as administrators on 24 December 2014," it says.

     
  13.  
    City Link 07:08: Breaking News

    Better Capital has been explaining itself in a statement just issued to stock market investors. It says: "Unfortunately the appointment of an administrator was leaked to the media ahead of the intended announcement. The directors very much regret the impact on the employees of City Link receiving such bad news on Christmas Day." So it seems the Christmas day announcement was not intended.

     
  14.  
    06:57: City Link
    Jon Moulton

    Jon Moulton, the man whose private investment firm Better Capital owned - and is now shutting - City Link, is going to explain himself. He's fronting up on the Today programme on Radio 4 at 07:50 to explain why he decided to close the courier business. He's been quoted in the FT as saying he explored "every possible way" to keep the firm going, and that he lost several million pounds of his own money.

     
  15.  
    06:50: Lord King BBC Radio 4
    Mervyn King, former governor of the Bank of England

    Lord King is on the Today programme. He's talking about the financial crisis and how he and US Federal Reserve president Ben Bernanke responded to it. He says the biggest problem both men had was explaining to people that they were taking measures that were "quite exceptional to try to prevent something terrible happening." He also suggests quantitative easing - buying government bonds - was not an unusual policy measure but that it hadn't been used for a very long time. Bank of England governors had spent the post war period trying to prevent money growing too quickly in the economy, "now we were trying to stop it falling and trying to inject money into the economy," he says

     
  16.  
    06:40: The Interview

    Sony appear to be trumpeting the fact that The Interview (hated by North Koreans) has become the most downloaded new film yet produced by the company. The controversial comedy was downloaded two million times between the 24th and 27th December, taking nearly £10m. Is that a lot to shout about?

     
  17.  
    06:27: Greece Radio 5 live
    Members of the Greek cabinet with Prime Minister Antonis Samaras

    The Greek parliament is to make a third and final attempt to elect a new president. On Wake Up to Money, Constantine Michalos, chairman of the Athens Chambers of Commerce and Industry, said he expected the vote to fail, automatically triggering a swift general election. "It looks increasingly unlikely, if not impossible, that the government will succeed in getting a positive Parliamentary presidential vote," he said. "The choice that the Greek people will be called upon to make in a few weeks time is the possibility of an instant death, because we've heard the main opposition, and the economic policy they will follow, which is totally opposite to the one the eurozone has been dictating over the last four and a half years."

     
  18.  
    06:13: Eurostar ban?

    The Daily Mail has a report today that Eurostar has banned a passenger for life after "kicking him off a train" for complaining about the strength of his cup of tea. Daniel Confino, a financial expert who the newspaper says was instrumental in saving the foundering Eurotunnel project in the 1990s, now intends to have the ban ruled illegal at the High Court. He ordered two teas at £2.20 each - and asked for an extra bag so he could have a strong cuppa. But when he was charged £2.20 just for the third tea bag, he complained.

     
  19.  
    06:03: Lord King BBC Radio 4

    Lord Mervyn King, the former governor of the Bank of England has a new job - for just one day. He is the guest editor of the Today programme on Radio 4. And his big interviewee is Ben Bernanke, who was his counterpart as head of the US Federal Reserve during the great banking crisis a few years ago. Will they admit to any failings? Find out just after 08:00.

     
  20.  
    06:02: Good morning Ian Pollock Business reporter, BBC News

    Welcome back to the digital coal face. We hope you have enjoyed your Christmas holiday so far. If you would like to get in touch with us you can do so via email at bizlivepage@bbc.co.uk or on twitter @bbcbusiness.

     
  21.  
    06:01: Mathew West Business Reporter

    Morning folks. Former Bank of England governor Lord King is guest editing the Today programme. Greece holds a crucial presidential vote, which could have implications for its International Monetary Fund (IMF)/European Union (EU) bailout. And the search continues for the missing Air Asia flight QZ8501. So plenty to digest this morning. Stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.