France Turns to Economists to Improve Forecasting After Errors
(Bloomberg) -- The French government is enlisting the help of external economists to improve fiscal forecasting after errors during the previous administration undermined its efforts to rein in the deficit.
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A group of experts meeting for the first time on Thursday will look at how to adapt predictions to an increasingly volatile backdrop and boost visibility on how public finances are piloted.
France’s plan to narrow the budget deficit drifted off course this year, principally because the Finance Ministry’s projections for tax revenue proved far too optimistic. The economy has continued to grow, but that masked prolonged weakness in consumer spending and investment that are crucial for filling state coffers.
The deficit is forecast to reach 6.1% of economic output in 2024, far wider than the 4.4% in initial budget plans. The deterioration, combined with political uncertainty after the summer’s snap legislative elections, has undermined investor confidence and driven up risk premiums on French debt compared with European peers.
The new committee of economists will report its findings and recommendations to the government in mid-December.
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