Wolfgang Schaeuble says France, Italy on right path as borrowing falls

BERLIN: France and Italy are on the right path in reducing their net new borrowing, German Finance Minister Wolfgang Schaeuble said in a radio interview to be aired on Sunday, adding that net new borrowing had been cut sharply throughout the euro zone.

Germany posted its first balanced budget in 2014 since 1969 and has long urged its eurozone partners to reduce their deficits that contributed to the currency bloc's crisis.

"France has cut its new borrowing considerably, France is on the right path - and so is Italy," Schaeuble told Deutschlandfunk radio. "The average net new borrowing in the euro zone has been cut in half in recent years. So we're on the right path in Europe."

Schaeuble, who will host a meeting of G7 finance ministers in Dresden this week, added that the United States has also reduced its net borrowing in recent years with solid economic growth.

France's deficit narrowed slightly to 4.0 per cent of annual output last year, the European Union's statistics office said, confirming French figures which have allowed Paris to reduce its deficit target for this year.

France's deficit in 2014 slipped by 0.1 per centage point from 4.1 per cent in 2013, Eurostat said last month.

France cut its budget deficit target for 2015 in March and said economic growth could beat the government's official 1 per cent forecast. The government had been forecasting an increase to 4.4 per cent.

Italy's general budget deficit in 2014 squarely hit the EU's ceiling of 3 per cent of gross domestic product. This year the government aims to reduce it to 2.6 per cent of GDP.

For the euro zone as a whole, the deficit level narrowed to 2.4 per cent from 2.9 per cent in 2013, while debt as a per centage of gross domestic product grew to 91.9 per cent from 90.9 per cent.