I doubt it there is a hike in the EU.
I have no doubts they absolutely 100% want to.
As for growth I doubt it.
What will this do to stability pact for France?
quote.bloomberg.com
French Finance Minister Cuts Growth Forecast, Citing Oil, Euro
March 16 (Bloomberg) -- French Finance Minister Thierry Breton cut France's 2005 growth forecast, citing higher energy costs and the appreciating euro. He introduced new tax breaks to boost spending and research.
Breton said the $1.8 trillion economy, Europe's third biggest, will expand by as little as 2 percent this year, compared with the previous estimate of 2.5 percent. The former chief executive of France Telecom SA said the budget deficit would be no wider than forecast.
``The international environment is uncertain and creates downwards pressures significant enough for me to take them into account,'' said Breton, 50, in a Paris briefing, his first since being named Feb. 28. He cited ``oil and the dollar exchange rate.''
The slowdown in France comes as economists cut growth estimates for Germany, its biggest trading partner and Europe's largest economy. The Bank of France has lowered its first-quarter forecast twice in the past month to 0.4 percent from 0.6 percent amid the highest unemployment rate in five years.
Deficit Forecast
Breton said the government was sticking by its promise to meet the European Union budget deficit ceiling, 3 percent of gross domestic product, for the first time since 2001. He said higher corporate tax receipts and tighter controls on medical spending would help the government contain its shortfall to 2.9 percent of GDP.
The new tax breaks to encourage spending and investment would shore up growth, Breton said. They include allowing companies to deduct as much as 200 euros per employee bonus and deduct 25 percent of their investments in research and venture capital spending. The breaks would be limited to 2.5 percent of companies' tax payments this year.
Consumer spending, the biggest part of the economy, declined last month, the central bank reported March 14. France's industrial output growth slowed 0.2 percent, the national statistics office, Insee said March 10. A jobless rate of 10 percent is crimping household spending.
The euro region's economies are being hobbled by their currency's 9 percent appreciation against the dollar in the past year and a 61 percent rise in oil prices on the New York Mercantile Exchange.
The French economy's expansion exceeded the European Union rate in 2004 as government tax cuts encouraged consumer spending and lowered households' savings rate. The reduction in the 2005 forecast would bring it closer to the European Central Bank's estimate of growth between 1.6 percent and 1.9 percent.
Breton said he had a ``strong conviction'' that 2005 growth would exceed 2 percent.
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