French deficit balloons

France's budget deficit has more than doubled over the past year, reaching €86.6 billion in June as state spending soars during the recession, the budget ministry said Tuesday.

The deficit stood at €32.8 billion in June of last year.

The gap is mostly due to the €21.5 billion in state spending contained in President Nicolas Sarkozy's economic stimulus package, which relies heavily on public investment projects.

A loss of tax revenue from the downturn has also left a hole in state coffers.

Revenues totalled €108.5 billion, down €35.6 billion from last year as the economic turmoil ravages tax revenue.

The French government expects the economy to shrink by three per cent this year, and to show growth of 0.5 per cent in 2010.