Crisis costs drive up French official state deficit

The French state budget showed a hugely increased deficit of €71.9 billion euros at the end of April because of the economic crisis, the budget ministry said.

This figure compared with a deficit of €45 billion at the same time last year. At the end of March the deficit was €43.7 billion.

The ministry said the increase reflected the costs of measures to support the economy during recession and "the less favourable trend of tax revenue".

The central state budget is only one component of the figure used to calculate the public deficit which is the key figure under European Union constraints on control of public finances, particularly with regard to the soundness of the eurozone.

The public deficit comprises a state's central government budget, social welfare budgets and local authority finances.

In France welfare budgets, including the social security health budget, are calculated separately and are a huge component of the total. This week data pointed to a big overshooting of spending on the social-health budgets, largely due to a fall in contributions from employers and employees as unemployment rose.

Meanwhile data from the official statistics institute Istat showed that consumer prices fell by 0.3 per cent in May from the level in May of 2008, to show the first 12-month deflation since 1957.