The financial crisis will leave France's public finances in a serious condition given the already high deficit and debt levels, the Organization for Economic Co-operation and Development said in its latest economic survey for France.

France's budget deficit is likely to widen to 6.7% of GDP this year and to 8.3% in 2010, above the currency bloc's deficit ceiling of 3% of GDP.

The OECD said French output is likely to contract further during the rest of this year, and prospects for 2010 remain highly uncertain, despite the many stimulus plans at home and abroad. However, it said the recession should be less deep than elsewhere.

The OECD forecasts the French economy to contract 3.3% this year and by 0.1% in 2010.

It said the short-term challenge for the French authorities is to pull the economy out of recession while avoiding recourse to budgetary measures. Further, the OECD noted that urgent implementation of a public deficit-reducing programme is necessary once the recovery is well underway. It should be consistent with obligations under the Stability and Growth Pact, it added.

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