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A report from credit ratings agency Moody's, released Tuesday, showed that nominal budget deficits in the euro area have dropped since 2008. However, "the aggregate share of In the last year, the proportion of spending in this area has risen to 76.3 percent of total spending from 74.5 percent in 2008. "
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France, traditionally seen as a welfare state, has promised in its 2019 budget plan to reform the way benefits are calculated
According to Vincent Juvyns, Global Market Strategist at JP Morgan Asset Management, the commitment to reforms is one of the big differences between France and Italy. While the government in France wants to go ahead and change certain areas, the executive in Rome has had a backtracking on key reforms that the previous government had implemented, including an overhaul to the pension system.
Florian Hense, an economist at Berenberg, also told by CNBC via email that the French budget might be even worse than Italy, but added that the big difference is the rhetoric coming from other countries.
"Taken at face value, the French budget plans do not look much Better than the Italian's, but in fact worse.But, while France is credibly working on improving its long-run growth potential, Italy is doing the opposite (think a lower retirement age)
Overall, France has not yet been able to do anything about it, but by a very thin margin. While France's debt is set to hit 98.7 percent of GDP in 2018, it is forecast to fall by 0.1 percentage points in 2019 to 98.6 percent.
Looking at Italy, the government said that the country's debt ratio will decline from 131.2 percent of GDP in 2017 to 126.7 percent in 2021.
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