French public debt to reach 2 trillion euros, report

France's public debt is expected to reach nearly two trillion euros by the end of 2014, which is 95.1 percent of GDP, considerably higher than government estimates, Tuesday’s conservative French daily Le Figaro reports.

REUTERS/Robert Pratta

The French government had declared that France's overall public debt would stand at 94.3 percent of gross domestic product next year but French Finance Minister Pierre Moscovici did not reject the new figure when asked about it on France 2 television on Tuesday, admitting that public debt would reach "maximum" levels in 2014 before then diminishing.

At the end of 2012, the debt amounted to 90.2 percent of GDP.The new figure therefore indicates a rise of more than 120 billion euros over two years, according to Le Figaro's report.

European Union rules require public debt to be no more than 60 percent of GDP or falling towards this ratio.

Meanwhile France's public auditor has warned that the "spiral of social debt" (spending on healthcare, family and pensions) which contributes to overspending, was "abnormal and particularly dangerous.”

Didier Migaud, president of the Cour des Comptes (France's public auditor) said on Tuesday that the current financial state of the country's generous healthcare system was "worrying".

The deficit is expected to hit nearly eight billion euros this year.

This "maintains a particularly abnormal and particularly dangerous spiral of social debt," Migaud said as he unveiled an annual report on the state of France's social security system.

France’s heavy debt load has caused concern that financial markets could turn against it but that has yet to happen - France's borrowing prices are reasonable and have even hit record lows in the past two years.

In his interview, Moscovici insisted that France's credibility on the debt market was not under threat, saying the government was implementing reforms "that allow for the primary deficit to fall."

He said the primary deficit - which does not include interest payments on debt - was going to fall slightly in 2014 from this year's 1.7 percent of GDP.

Meanwhile, France's overall public deficit in 2013 is due to come in at 4.1 percent of GDP, higher than the 3.9 percent agreed with the EU, and will come in at 3.6 percent next year.

But Moscovici has vowed Paris will meet its 2015 EU-mandated deadline to bring the deficit below three percent.