France raises public debt forecasts

France yesterday increased its public debt forecasts for 2012 and 2013 to take into account the €6.6 billion it will have to pay into the ESM eurozone permanent rescue fund.

Forecasts presented to the French Cabinet said public debt would be 89.1 per cent of GDP this year instead of 88.3 per cent previously predicted.

Public debt was predicted to rise next year to 89.3 per cent of output, higher than the earlier forecast of 88.2 per cent.

The French Cabinet yesterday approved the setting up of the European Stability Mechanism fund, which was created to ease market pressure on indebted nations like Greece.

The ESM will run in parallel with the temporary European Financial Stability Facility for one year. The combined capacity of both funds is supposed to be capped at €500 billion but several eurozone countries plus the European Central Bank and the European Commission want it to be larger.