France faces cuts to stay on target for Emu

The French government may have to impose emergency spending cuts this year to meet the Maastricht guidelines for membership of the European single currency.

Despite the first signs of a recovery in the French economy, mid-year spending cuts may have to be imposed to keep the budget deficit close to the target of 3 per cent of gross national product set by the Maastricht treaty.

The social security budget - covering health and unemployment - also appears to be overshooting its projected deficit for 1997. The budget short-falls, revealed by Le Monde yesterday, are blamed partly on lower than anticipated VAT receipts.