France reduces budget deficit target, signals economic recovery speeds up

France has trimmed its budget deficit target for this year and signalled that the economic recovery is speeding up.

As the better-than-expected deficit data for 2014 has been released, Finance Minister Michel Sapin said there were reasons to be confident about growth.

Official figures indicated the 2014 deficit was 4% instead of the 4.4% forecast, and will fall to about 3.8% this year, Mr Sapin estimated.

Sapin stated that economic growth could outpace the government's 1% forecast.

"A lower-than-expected deficit brings confidence," he said. "We will do better than 1% (economic) growth in 2015."

Recent economic data has showed that although unemployment is still rising, business confidence has improved. Public spending has dropped, and last year's expected shortfall in revenues was not tragic, as it had been considered.

"Things are falling into place to back the scenario of growth accelerating in 2015," said Credit Agricole economist Axelle Lacan.

On Thursday, the released data showed that the eurozone's second-largest economy grew by 0.4% in 2014 - the same pace as in 2013.

Now France, which has systematically missed its fiscal targets, is confident it will finally bring the deficit below an EU cap of 3% of GDP in 2017.

President Francois Hollande, during his 2012 election campaign, had pledged to bring the deficit down to the EU limit by end-2013 but his government has since pushed the target back several times.

This month, European Union finance ministers gave France two more years to cut the deficit to the 3% limit, extending the deadline for the third time since 2009.