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Sarkozy pledges to stick to deficit-cutting goals

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[August 10, 2011]  PARIS (AP) -- French President Nicolas Sarkozy pledged Wednesday to stick to the country's deficit-cutting goals amid rising concerns that France could be the next triple A-rated economy to suffer a ratings downgrade following the United States.

Some analysts have warned that France -- the world's fifth-biggest economy and a driver of the eurozone -- can't afford to keep bailing out poorer European states especially at a time it's growth rates are moderating.

Sarkozy, who along with other European leaders has come under criticism for staying on holiday as the markets were gripped by fear, cut short his vacation on the French Riviera with his pregnant wife to summon key government ministers for an emergency meeting on the financial crisis.

No new measures were announced, but Sarkozy insisted that "commitments to reducing the deficit are inviolable and will be maintained."

Worries over the debt problems afflicting a number of European countries as well as the U.S. have knocked confidence over the global economic recovery and triggered turmoil in financial markets around the world.

Sarkozy said the French government will make new decisions Aug. 24 aimed at ensuring that it attains its deficit-reduction objectives. He also reiterated his call for a constitutional change requiring balanced budgets.

France has for years failed to deliver on its deficit reduction promises.

It is now aiming for a deficit of 5.7 percent of national income this year from 7.1 percent in 2010, and 4.6 percent next year. It's targeting a deficit of 3 percent of gross domestic product in 2013, a target that has been delayed multiple times, which Sarkozy has blamed on the global financial crisis.

"We will take the necessary measures to reach these goals," Finance Minister Francois Baroin said, without elaborating.

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Baroin suggested earlier this week that Europe could boost the size of the eurozone bailout fund, the European Financial Stability Facility. But Germany, the region's strongest economy, has been reluctant to do more to support debt-ridden neighbors.

After ratings agency Standard & Poor's downgraded U.S. debt last week, worries surfaced that France could be next to lose the coveted and rare AAA rating, if it continues to contribute to further bailouts of eurozone countries.

Concerns have also surfaced about French growth. Earlier this week, the French central bank said that France will likely grow only 0.2 percent in the third quarter.

In Germany, officials made clear Wednesday that Chancellor Angela Merkel is sticking to her plans to return to the office next week from her holiday.

[Associated Press; By GREG KELLER and ANGELA CHARLTON]

Cecile Brisson in Paris and Geir Moulson in Berlin contributed to this story.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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