France's 2013 deficit overshot government targets, statistics showed Monday, dealing a second blow to President François Hollande just hours after his Socialist Party's calamitous performance in local elections, reports The Wall Street Journal.
The country's deficit fell to 4.3% of gross domestic product in 2013, missing the government's 4.1% target despite a sharp increase in taxation designed to bolster public finances.
The disappointing figures Monday morning came after voters showed their dissatisfaction with Mr. Hollande at the polls Sunday by toppling Socialist incumbents from the leadership of around 155 large and midsize towns, usually the stronghold of the French left.
The main opposition party, the center right Union pour un Mouvement Populaire, took most of the spoils. But the far-right National Front also broke through in around a dozen smaller towns, according to preliminary results.
The double blow of an electoral thrashing and a failure to hit deficit targets makes a government reshuffle increasingly likely, analysts say.
"In France, when there is a no margin for maneuver, we tend to reshuffle to try and show we are changing something,"" said Christopher Dembik, Paris-based economist for investment bank Saxo Banque.
Mr. Hollande has little room for changes in policies. He is already under pressure to get the deficit within European Union limits of 3% of economic output by 2015 and meeting the 4.1% target in 2013 was a key step on the path. Brussels has let France off the hook once before—extending the deadline for the 3% limit to 2015 from 2013—but European officials have indicated they will resist giving a green light to miss targets once again.
Mr. Hollande's ministers have said the government will stay the course to meet the EU targets. But the president is also promising a "Responsibility Pact" with business to cut taxes on labor in a bid to stimulate job creation and investment, and bring unemployment down from near record highs.
To fund the tax cuts and balance the budget in the long term, Mr. Hollande has earmarked €50 billion ($68.8 billion) of public spending cuts between 2015 and 2017.
Economists now say this won't be enough to meet both goals.
French bank estimates around €85 billion to €90 billion would be needed if Mr. Hollande is to deliver on his promises. But such steep cuts would drag further still on economic growth and be counterproductive, analysts say.
Read more of this report from The Wall Street Journal.