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France’s 2013 budget deficit wider than expected: ministry Bosses, unions meet

PARIS, Jan 17, (Agencies): France’s budget deficit for 2013 was wider than expected, reaching 74.9 billion euros — some 2.7 billion more than forecasted, official data showed. Statistics released by the finance ministry showed that the deficit was 12 billion euros less than in 2012, but missed its forecasted figure in November. The wider than expected deficit was due to “less than expected tax revenues, mainly due to an unfavourable economic climate,” Finance Minister Pierre Moscovici and Budget Minister Bernard Caseneuve said in a statement. The European Union had said in November that France would miss an agreed target to cut its public deficit to 3.0 percent of output, predicting that the deficit would reach 4.1 percent in 2013.

Meanwhile, budget minister Bernard Cazeneuve said on Wednesday that 11,000 people had come forward to regularise funds hidden abroad, which could bring in one billion euros ($1.4 billion) in extra revenue. French are coming forward to declare funds as Switzerland has curtailed its vaunted banking secrecy under international pressure and has pushed clients to report their accounts. In June, Cazeneuve issued rules which offered lower penalties for French who came forward and reported hidden accounts, although it does not amount to an amnesty. Cazaneuve told lawmakers on Wednesday that 11,000 people had applied to take advantage of the offer and this represents “potential revenue of more than one billion euros” for the French state. The head of the Swiss Banking Association said in November that almost all French clients were taking up the eased regularisation measures.

Sources have said that Swiss banks are giving French clients until March to declare their accounts or have them closed. Switzerland has agreed to an international convention against tax fraud and signed an agreement with the United States on the automatic reporting of bank account information which is expected to become the global standard to discourage tax fraud.

French unions and employers launched talks on Friday to reform the heavily indebted state jobless system, with labour leaders warning they would fight any move to cut back jobseekers’ rights, among Europe’s most generous. President Francois Hollande’s Socialist government wants to cut the jobless fund’s record financial shortfall and fight unemployment stuck near 11 percent. It follows overhauls of labour rules and the job training system last year. In a news conference this week setting out his reform plan, Hollande ruled out a flat reduction of unemployment benefits. However, any reform attacking the complexity of the present system is seen encouraging the jobless to take up work, even temporary, and thus reducing the overall funding burden.

The jobless fund, UNEDIC, said this week its deficit, which counts towards France’s overall public deficit target, would hit a record 4.3 billion euros ($5.6 billion) this year as joblessness kept rising. Although the national public auditor warns the deficit is unsustainable, union leaders rule out cutting the amount or duration of benefits, which go up to 75 percent of past wages and last for two years — and three years for workers over 50. “Reducing jobseekers’ rights in a period of unemployment is out of the question,” Laurent Berger, head of the moderate CFDT union closest to the government, told France 2 TV. “The system is not as generous as many suggest.”

The negotiations are due to run until the end of March when the current contract expires. In France, top earners older than 50 can receive up to 7,000 euros per month for as long as 36 months. However, unemployed people in France get fewer additional benefits than their peers in many European countries.
The MEDEF employer association wants benefits to diminish over time and has called for scrapping special schemes like the one for temporary workers in the entertainment industry. Benefits for such workers, who must prove employment for just half the year and make up for only three percent of the number of jobless people, account for about a quarter of the overall deficit in the unemployment fund’s counts.

But French unions are also opposed to diminishing benefits or tougher monitoring, despite widespread reports of lax followup by chronically understaffed Pole Emploi job centres. Rather, they depend on a recently agreed scheme of “rechargeable” benefits which continue to be paid out even if workers find short-term job contracts to coax more of the unemployed back into the job market.

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