THE NEW Prime Minister of France, Manuel Valls, yesterday gained approval from the country’s parliament for a raft of tax cuts.
France’s “responsibility pact” is to include a cut in social security contributions for low earners from next year, along with an income tax discount for low-paid households.
Dominique Barbet of BNP Paribas said that a further package of spending cuts should run to 2.4 per cent of GDP, with €50bn (£41.22bn) of cuts planned for 2015-17. The Prime Minister called for “budgetary rigour but not for austerity”, adding to suspicions that France will again miss deficit targets it has signed up to.
“Given the responsibility and solidarity pacts planned, the decline of public expenditure is unlikely to be strong and quick enough to cut the public deficit below the three per cent threshold by 2015,” added Barbet.
Valls added that the appreciation of the euro had caused a “slower economic recovery” for France, citing looser policy in the US.