France Faces Major Test as It Enters 'Danger Zone'

Having been in power for less than two months Francois Hollande is facing the first major test of his pro-growth election (related: 10 Game-Changing Elections) commitments after a warning from the national audit office that France’s economy is in the “danger zone” and risks falling into a “debt spiral.”

Bloomberg | Getty Images Francois Hollande, France's president, arrives for a news conference following the European Leaders (EU) summit at the European Council headquarters in Brussels, Belgium, on Thursday, May 24, 2012.

Late on Monday the national audit office said the French budget deficit will overshoot by 6-10 billion euros ($7.56-12.6 billion) this year and by 33 billion euros in 2013. In order to bring the budget in-line with EU rules, Hollande is going to have to make difficult decisions on spending and taxes that could draw criticism from his own party and unions who supported the pro-growth message that saw him beat Nicolas Sarkozy to the presidency in May.

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