Frankrijk belooft zich te houden aan begrotingsregels euro (en)

The French government will today unveil a budget which should see its economy respect EU deficit rules for the first time since 2001.

Paris has for three consecutive years failed to stick to EU rules, which state that a country's budget deficit must be below three percent of its gross domestic product (GDP).

But French finance minister, Nicolas Sarkozy, will today announce that Paris will sneak under the three percent bar in 2005, with a deficit of 2.9 percent of GDP.

"The reduction of the deficits is the absolute priority", said Mr Sarkozy, according to AFP, adding, "If we want to participate in the construction of Europe, we must respect the rules".

France will still break the rules this year - its deficit is projected to reach 3.6 percent of GDP, down from 4.2 percent last year.

Under pressure

France has come under severe pressure from EU authorities to curb its deficits in a bid to restore credibility to the Stability and Growth Pact, which underpins the euro.

The reduction in the deficit will mainly be acheived by a windfall of approximately seven billion euro (or 0.4 percent of GDP) from state-owned electricity company Electricité de France.

This payment will be made in return for the Government taking over responsibility for the firm's pension liabilities.

Stronger than average growth will also help bring the deficit down, according to Government projections. Mr Sarkozy is counting on a healthy growth rate of 2.5 percent next year.

Today's presentation of the budget will likely be Mr Sarkozy's last significant act before stepping down to campaign for the Presidency of the centre-right UMP party.

He is then expected to use his election - which is almost guaranteed - to run for the French Presidency in 2007.