FRANCE will curb civil service spending and scrap tax breaks but otherwise rely on faster economic growth to replenish public coffers in 2011, according to a budget bill that some economists said lacked ambition.
Wary of voter dismay over pension reforms ahead of elections in early 2012, President Nicolas Sarkozy is seeking to honour deficit-reduction pledges without the level of austerity that many of France’s Eurozone peers have programmed in as they seek to neutralise the heavy state spending that helped pull them out of recession.
The cornerstone of the bill presented yesterday is a cut in the public deficit to six per cent of gross domestic product in 2011 from 7.7 per cent in 2010, the first phase of a plan to trim the gap to the EU’s three per cent ceiling in 2013 and to two per cent in 2014. France also expects it debts to peak in 2012.
Economy minister Christine Lagarde said she hoped the plans for deficit cuts worth close to €40bn (£34bn) next year would reassure financial markets that remain edgy about bloated debt levels in many European countries.
“Investors who finance and refinance our debt are extremely attentive to improvement of public finances, as are the rating agencies,” she told said.
The centre-right government has to convince markets that France is serious enough on deficit control to keep an AAA credit rating that allows it to service its debt at a low cost.