France open to letting deficit reduction target slip amid tariff uncertainty

PARIS, April 4 (Reuters) - French Finance Minister Eric Lombard opened the door on Friday to letting the deficit reduction target slip this year, ruling out extra spending cuts and tax increases to offset a potential shortfall in growth.

Speaking to BFM TV, Lombard said things were uncertain and it was necessary to wait to see in the coming weeks how negotiations with the United States would go over recently announced tariffs to have a better idea of its impact on the French economy.

If tariffs on the European Union - announced on Wednesday to be 20% on EU imports, with higher levels on certain French territories - were maintained, Lombard said: "in that case, revenue would decrease, the GDP would decrease, which would - without getting too technical - degrade the level of the deficit, and I think in that case, to protect the French people, I think we must accept that."

The central bank for the euro zone's second largest economy had forecast growth of 0.9% this year, down from 1.1% last year, but has revised that expectation downwards to 0.7%.

France has been aiming to trim its deficit to 5.4% of economic output this year from 5.8% last year as a step toward bringing its shortfall in line with a European Union ceiling of 3% by 2029.

But Paris still has one of the biggest fiscal gaps in the EU and, unlike other big European countries, it will not be able to bring its debt burden to pre-pandemic levels by the end of the decade.