The fiscal condition of advanced economies in Europe has attracted increasing attention and alarm in recent months particularly since the crisis in Greece forced politicians to focus on the issue. The recession has taken a toll on budgets throughout the Euro-zone, and France is no exception.
In an interview with The Economist shown below, French Finance Minister Christine Lagarde comments on her country’s attempt to trim the budget deficit to 3 percent of GDP by 2013. Ms. Lagarde states that significant austerity measures will be imposed rather than relying on tax increases. In addition to her comments on the fiscal situation in France, Ms. Lagarde comments on the bank stress test results due to be released on Friday, February 23.
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As readers know, the United States fiscal situation is among the worst facing any advanced economy and few steps are being taken in the short run to address the problem. The current approach has been to set up a National Commission on Fiscal Responsibility and Reform designed to come up with a solution to balance the budget, excluding interest on the debt, by 2015. However, the commission will not report until December 1 which relieves politicians from addressing the issue prior to the November elections.