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UPDATE 1-Germany, France signal faster deficit cuts

Published 11/30/2009, 07:39 AM
Updated 11/30/2009, 07:42 AM

* France backs goal to cut deficit to 3 pct/GDP by 2013

* Weber says Germany could cut deficit faster than expected

(Adds quotes, background)

BERLIN, Nov 30 (Reuters) - Germany and France signalled on Monday that they could rein in their budget deficits faster than previously stated.

French Economy Minister Christine Lagarde told reporters in Berlin that she backed the goal of reducing the French deficit to 3 percent of gross domestic product (GDP) by 2013, although she said reaching the target depended on economic conditions.

She had said previously that 2014 was a more realistic date for bringing the French deficit below the European Union's threshold.

"We came to the mutually acceptable solution which aims for 3 percent in 2013, cyclical conditions permitting ... in other words if the situation is bad we can't reach that target," Lagarde said after a meeting with German Finance Minister Wolfgang Schaeuble and Bundesbank President Axel Weber.

At a news conference after their meeting, Schaeuble confirmed a report in a newspaper that German net new borrowing could be about 10 billion euros lower in 2009 than the 49.1 billion euros planned in a supplementary budget.

Weber said this suggested Germany could emerge from EU disciplinary proceedings over its deficit faster than expected.

"It is possible that Germany will come out faster and better from this deficit procedure," Weber said.

Germany has said it will begin consolidating its finances in 2011 and bring its deficit back under the 3 percent threshold by 2013 -- in line with a deadline set by the European Commission for both Berlin and Paris.

Schaeuble and Lagarde issued a statement vowing to cooperate closely in the run-up to future meetings of the G20 and Eurogroup.

They said they wanted to agree common positions on economic coordination within the eurozone and a strategy for tax harmonisation at the European level.

(Reporting by Noah Barkin and Dave Graham; editing by Patrick Graham)

((noah.barkin@reuters.com; +49 30 2888 5091; Reuters Messaging: rm://noah.barkin.reuters.com@reuters.net))

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