European stocks closed the markets higher on Thursday. French CAC 40 index closed in higher on a four consecutive day uptrend. Germany’s DAX index as well as Euro STOXX 50 edged higher at the closure of the markets. UK’s FTSE 100 index took a nosedive.
France Financial Outlook
The CAC 40 index was hovering at its longest winning streak on Thursday. Gains in sectors such as food & drugs, gas & water and general financial boosted the CAC 40 index. The Automobile sector also recorded gains pushing the index higher.
French Finance Minister, Bruno Le Maire, reiterated that he had no plans to raise taxes. Economic investors expected an increase in taxes since the government has been facing pressures to reduce its deficit.
France being euro zone’s second largest economy, plans to reduce its deficit. According to the Ministry of Finance, the country plans on gradually reducing the deficit to less than 3% of GDP by 2027.
However, this will only be done after the country hits a post war record of 9.4% gross domestic product this year. The country’s ministry of finance anticipates a marginal improvement. It forecasts a decline in the deficit to 9.0%.
To meet the new deficit reduction target, certain measures will have to be taken. The country’s annual spending growth will have to be limited to 0.7% after inflation. This will be the lowest in two decades.
In addition to limiting the spending growth, France will carry out structural reforms. The retirement system overhaul that was put in place after the Corona virus outbreak, will be among the reforms.
The Finance Ministry expects the national debt to jump from 117.8% of GDP to 118.3% in 2025. However, it is also expected that the debt will slowly decline by 1.4% annually starting next year.
The ministry expects the country’s economy to rebound by 5% at the end of this year after nosediving 8.2% last year. The economy is also expected to jump 4% next year.
CAC 40 Movers
Kering was the best performer in the CAC 40 index. The luxury goods company, gained 1.19% in its stock earnings. STMicroelectronics and BNP Paribas were also among the top performers. Each gained 1.14% and 1.02% respectively. Société Générale gained 1% in its share earnings.
Laggards in the index include Arcelor Mittal, Alstom, and Atos. Arcelor Mittal led the losses with a 3.45% decline. Alstom and Atos fell by 2.96% and 1.85% respectively.