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France proposes slashed spending in new budget

France proposes slashed spending in new budget

The French government unveiled Wednesday a 2011 budget that aims to tighten the deficit sharply in the face of pressure from both its European partners and international investors.
The 2011 budget presented in parliament includes (EURO)40 billion ($54 billion) in spending cuts and extra revenue that Budget Minister Francois Baroin says will rein in the country's deficit to 6 percent of gross domestic product next year from 7.7 percent in 2010.
"This is a historic budget," Baroin said. "A drop in the deficit by 1.7 percentage points in one year has not been seen in fifty years," he said.
To meet its goal, the government is also counting on economic growth picking up to 2 percent next year from 1.5 percent in 2010.
Finance Minister Christine Lagarde said she had "no hesitation" in sticking with that forecast, which is above that of many private sector economists as well as the European Commission.
France has pledged to its European partners to bring down its deficit to 3 percent of GDP by 2013. While Germany has set 2016 as a date to balance its budget, Baroin would only say that France will "probably take a little longer" to do the same. France's debt meanwhile is forecast to continue rising to almost 88 percent of GDP in 2012 from 83 percent this year, and to begin falling beginning in 2013.
Much of the spending cuts in next year's budget come from a rollback in stimulus measures France introduced during the financial crisis. Another (EURO)10 billion will be saved by eliminating tax breaks, including those for so-called "triple-play" internet, television and telephone contracts and a break for newly wedded couples.


Updated : 2021-10-21 00:36 GMT+08:00