France said its budget deficit will grow to a record this year and next as the global recession causes tax receipts to shrivel and a government stimulus package ramps up spending, according to AP. The budget gap is expected to widen to 8.2 percent of gross domestic product in 2009, from 3.4 percent last year, Budget Minister Eric Woerth said Wednesday as he presented next year's budget to journalists. In 2010, the budget shortfall will grow even further to a never before recorded 8.5 percent of GDP. Accounts will remain in the red for the foreseeable future, underlying the challenges for France's second largest economy as it turns from crisis management to trying to support the country's fragile economic recovery. Although France plans to start reducing its deficit after 2010, it is still forecasting a budget shortfall of 5 percent of GDP in 2013. That means debt will keep growing from 77.1 percent of economic output this year to 91 percent in 2013, according to government forecasts. In addition to all this borrowed money, French President Nicolas Sarkozy plans to raise even more funds to finance infrastructure works through a «grand loan.» Woerth said the 2010 budget does not take this into account because the government has not yet decided how much extra money it will raise, and how. Finance Minister Christine Lagarde defended the plans on Wednesday, saying that the extra spending was needed to ward off the crisis. She said France was one of the few Western economies to have grown in the second quarter _ when it notched up a 0.3 percent expansion. «We have to absolutely consolidate the small and fragile signs of recovery here and there to ensure that growth is stabilized,» she said at a news conference with Woerth. The spending «allowed us to alleviate some of the effects» of the global recession.
