Thursday, September 29, 2011

France's Budget First To Cut Spending Since... 1945!? With Elections Coming?

France "proudly" presented next year's budget as "the first to cut spending since World War II".
However, economists balked at the claim and said the cuts in the 2012 budget are not substantial enough to meet deficit targets laid out by the government -- or to reduce the country's debt load.

The Budget Ministry said that "Public debt reduction is a priority. It happens by first reducing the public deficit,"
Facing elections soon, skepticism abouds that they will really cut spending.

Budget Minister Valerie Pecresse: "It's a historic moment: For the first time since 1945, public expenditures year-on-year will go down,".

France hasn't balanced its budget in three decades and has for years flouted EU rules that require members to keep their deficits under 3 percent of GDP.
France's own bond yields -- the interest rate investors demand to lend a country money -- rose this summer amid fears its debts were too high.

"In response, the government unveiled a series of measures -- mostly new taxes -- that were reiterated in Wednesday's budget. Among other measures, it plans to increase taxes on the wealthy, levy a tax on sugary drinks and close loopholes.

It also promised to cut around 30,400 public jobs next year by not replacing one in two posts vacated by people retiring.
Budget Minister Valerie Pecresse told her colleagues Wednesday that -- including the austerity measures -- next year's deficit should fall to 80.8 billion euros ($109 billion) -- that's nearly 15 billion euros ($20.4 billion) smaller than this year's. (Business Week)

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