France faces cuts to stay on target for Emu

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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.