French Budget Minister Eric Woerth Friday said the strength of the euro has helped to offset a large part of the impact of oil price hikes on the French economy.
Speaking to reporters, Woerth said "the euro's appreciation is of help regarding the oil markets. It helped offset a large part of the oil price hikes."
The French government still aims to balance its budget by 2012 and to lower its public deficit to 2.0% of its gross domestic product by 2009.
For 2008, the deficit target of 2.5% of GDP will require "very stringent public spending," Woerth said, adding that current deficits aren't sustainable.
Yet, the government decided against increasing taxes and social charges to address the deficit issue, he said, noting that social charges and taxes in France are too high.
The French budget minister also said it was difficult to say whether the financial turmoil that stemmed from the U.S. subprime lending crisis is over yet.
"There is a decoupling of the real economy from the financial economy. The U.S. slowdown is not totally disconnected from the European economy and the French one. But luckily, France also trades with other countries than the U.S.," Woerth said.