France Budget Forecast "Wildly Inaccurate" Leaving €14 Billion Black Hole; Sharp Rise in French Unemployment
French President Francois Hollande hiked income taxes, VAT and corporation tax following his election two years ago. Hollande estimated those tax hikes would raise €30 Billion in revenue.
The BBC reports France Faces €14 Billion Budget Hole.
The French government faces a 14bn-euro black hole in its public finances after overestimating tax income for the last financial year.Surprise, Surprise, Not
French President Francois Hollande has raised income tax, VAT and corporation tax since he was elected two years ago.
The Court of Auditors said receipts from all three taxes amounted to an extra 16bn euros in 2013.
That was a little more than half the government's forecast of 30bn euros of extra tax income.
The Court of Auditors, which oversees the government's accounts, said the Elysee Palace's forecasts of tax revenue in 2013 were so wildly inaccurate that they cast doubt on its forecasts for this year.
It added the forecasts were overly optimistic and based on inaccurate projections.
Surprise, Surprise, Not (at least in this corner). Nor was there any surprise in this corner regarding French Unemployment.
Sharp Rise in French Unemployment
Via translation from Les Echos please note a Sharp Rise in French Unemployment
The number of Class A job seekers reached 3,626,500 in April. At this rate, the threshold of half a million more unemployed since the election of François Hollande will be reached this summer.Ministry of Labor Disses Pessimism
The March respite in unemployment was short-lived. According to official statistics released Wednesday, the number of unemployed has regained most of the beautiful growth last month.
The balance was more negative in April when we also take into account the number of unemployed who worked in the month.
No age group was spared in April, but older were the most affected. Unemployment has increased among youth by 0.2%, by 0.4% in age group 25-49 years, and by 0.7% among those older. The number of long-term unemployed also continued to rise.
The Ministry of Labour, said in a statement "We refuse to sink into pessimism. These figures reflect the situation observed in early 2014 year and they should be interpreted with caution because of the high volatility of monthly data, not the trend in the second quarter."
Another month or two will likely prove that optimism seriously misplaced.
Mike "Mish" Shedlock