PARIS (AFP) - The OECD trimmed its growth forecast for France on Tuesday but recommended the government avoid more spending cuts to meet it EU deficit reduction pledges.
The Organisation for Economic Cooperation and Development said it now expects the French economy to grow by 0.1 per cent this year, instead of the 0.3 per cent it forecast earlier.
It said it expected France's public deficit would come in at 3.5 per cent of economic output this year.
France had pledged to return to the 3.0 per cent EU deficit ceiling this year, but the OECD forecast that this will only be achieved next year.
However, the economic policy advisory body did not encourage France to make any additional spending cuts to meet the target.
"Deficit reduction efforts must continue as planned while letting automatic stabilisers operate fully," said the OECD in a survey of the French economy.
French President Francois Hollande last week publicly renounced the goal of hitting the 3.0 per cent target in 2013, saying the public deficit would probably reach 3.7 per cent of gross domestic product this year.
The OECD characterised the government's deficit reduction plans as "ambitious given current headwinds".
While urging the government to stick to plans to cut spending, the OECD urged a shift in taxes away from business and labour in a bid to boost competitiveness and growth.
The report noted that France's growth per capita over the past two decades has been among the lowest among its 34 member countries.
"Eliminating inefficient tax expenditures and increasing environmental, property and inheritance taxes would allow taxes on labour and businesses to be reduced further," said the OECD report which offered over a dozen specific recommendations.
The OECD said France's unemployment rate, which hit a 14-year record of 10.6 per cent at then end of 2012, would continue to rise before stabilising at 11.25 per cent at the end of this year.