France is unlikely to meet its 2017 budget deficit target, the country’s independent fiscal watchdog said yesterday, casting doubt on the government’s plan to cut the shortfall to less than three per cent of output.

The High Council of Public Finance’s (HCFP) assessment is a fresh blow to President François Hollande’s economic record seven months from a presidential election that polls suggest he has little chance of winning if he runs.

On Monday, jobless figures for August showed the biggest jump in the number of unemployed people for nearly three years. Scrutinising the main economic forecasts underpinning the 2017 budget, the HCFP said the government’s deficit reduction plans were “improbable” because of high risks that spending would be more than planned and revenues less than hoped.

Paris hopes to rebuild its fiscal credibility with its European partners

“Based on the information at its disposal, [the HCFP] considers as uncertain that the nominal deficit will be brought to less than three per cent of GDP in 2017,” it said in a report issued as Hollande’s government prepares to publish its 2017 budget.

Paris hopes to rebuild its fiscal credibility with its European partners by targeting a deficit of 2.7 per cent of GDP for 2017, the lowest in a decade and under the EU’s limit of three per cent.

The watchdog said government forecasts for 1.5 per cent GDP growth this year and next were optimistic, noting they were higher than what most private sector economists expected.

“The government’s growth outlook, which is based on a number of favourable assumptions, does not display the caution necessary to best meet public finance targets and commitments,” it said.