By Emile Picy
PARIS, March 4 (Reuters) - The French government's revised budget forecasts show the economy suffering its worst postwar recession this year with the budget deficit ballooning to nearly twice normal EU limits, a parliamentary source said on Wednesday.
The figures, already widely leaked in the media and broadly confirmed by the economy ministry, are to be presented to the cabinet by Economy Minister Christine Lagarde, who is also due to hold a news conference at 1215 GMT.
The revised budget draft law replaces the official forecast of 0.2-0.5 percent growth this year that had long ago been relegated to the scrapheap but which had not yet been replaced by a new official outlook.
The new forecasts show the French economy is expected to contract 1.5 percent in 2009, beating the 1.0 percent contraction seen during the oil shock that sent the world economy into recession in 1975, according to figures from national statistics office INSEE.
The European Commission is forecasting a 1.8 percent contraction for France in 2009, while the IMF expects the economy to shrink 1.9 percent.
The French forecasts see a rebound next year, with growth in the euro zone's second biggest economy expected to be 1.0 percent.
Like its counterparts elsewhere in the world, the French government has pumped billions into propping up the banking system as well as the wider economy, brushing aside the normal restraints imposed by European Union borrowing rules.
The deficit is expected to hit 5.6 percent of GDP in 2009, contracting slightly to 5.2 percent in 2010 and 4.0 percent in 2011, but it will remain well above the 3 percent limit laid down in the EU's Maastricht treaty.
France has so far narrowly avoided falling into recession -- normally defined as two successive quarters of negative growth -- but a 1.2 percent contraction reported in the fourth quarter underlined the shock facing the economy this year.
Each day brings announcements of company layoffs and unemployment has climbed sharply, rising past the symbolically important 2 million level and posing an increasing headache to a government that has seen its approval ratings dive.
More than 300,000 people have joined the jobless rolls since April 2008, when France's unemployment total began rising from a 25-year low hit in the first quarter of 2008, undermining the consumer confidence that will be vital to any recovery. (Reporting by Emile Picy; Writing by James Mackenzie; editing by David Stamp)