French president pledges to cut 50 billion euros in public spending over 3 years
PARIS - French President Francois Hollande pledged Tuesday to slash 50 billion euros in public spending and abolish 30 billion euros worth of payroll taxes by 2017 as he tries to encourage hiring and clean up public finances.
The cuts contrast with the anti-austerity platform that the Socialist Hollande rode to the presidency in 2012, as neighbouring Spain and Italy reeled from painful budget-squeezing measures.
"If France wants to keep his influence in the world, if France wants to weigh on the course of Europe, if it wants to keep control of its destiny, then it should imperatively restore its economic force," Hollande said.
A year-and-a-half into his term, Hollande is deeply unpopular for his failure to lower 11 per cent unemployment and improve France's stagnant economy. And France's refusal to undertake dramatic reforms spending has left public debt at 95 per cent of gross domestic product and deficit levels above EU limits.
Hollande laid out a broad economic strategy Tuesday that largely involved going "faster, farther" with modest reforms his government has already taken â€” and notably, reducing France's notoriously high labour costs.
The economy, meanwhile, suffered two recessions in recent years and growth is forecast at an anemic 0.2 per cent in 2013.
Hollande said he's "entering into battle" to fix the economy, and promised to cut 50 billion euros ($68 billion) in public spending over the years 2015-2017.
That's about 4 per cent of overall public spending. This year's budget includes 14.8 billion euros in spending cuts and 379.9 billion euros in overall spending.
Hollande also announced the end of a so-called family payroll tax, one of many taxes companies and employees pay on salaries. French employers pay the highest payroll taxes in the European Union
Hollande said that cut, to happen by 2017, would reduce the burden on companies and independent workers by 30 billion euros.
The family payroll tax is used to help finance subsidies to families. Hollande didn't say where the money for these subsidies would come from, but said the burden wouldn't fall on families. He insisted that the cuts do not mean France has to give up its social model.
A recent two-day "boss-napping" of managers at a Goodyear tire plant in northern France illustrated why multinationals are wary of investing. The French public often views business as the enemy, accusing big companies of paying executives too much, sending jobs abroad and hiding profits to avoid taxes.
France never faced the collapsing job market, investor panic and soaring borrowing rates that neighbours Spain and Italy did during the worst of Europe's debt crises. However, that meant that France hasn't made any radical labour market reforms and deep spending cuts that economists say are necessary to get growth growing again.
Hollande is under pressure after reports he had an affair, and repeatedly sought to turn the discussion at Tuesday's news conference back to the economy.
France's best hope for getting people employed again may not be Hollande but a pickup in the global economy.
Sylvie Corbet contributed to this report.
Read more Business News
- Province provides cheaper beerBC - 12:29 pm
- Man killed by horned cowVernon / N. Okanagan
- 116 perish in plane crashWorld
- Orchardists busy after rainfallPenticton / S. Okanagan
|QHR Technologies Inc||1.15||-0.02|
|Anavex Life Sciences||0.27||-0.01|
|Copper Mountain Mining||2.82||0.00|
|Sunrise Resources Ltd||0.05||+0.025|
|Mission Ready Services||0.19||+0.01|
The Big Picture Geopolitical tensions rattle markets The spectre of rising geopolitical tensions in Ukraine and Gaza cast a shadow over an otherwise positive week in the markets. News that a passenger...
The mainstream media are finally waking up to something unusual in British Columbia – a labour shortage. If the experience of Alberta is a guide to our own future, the highly skilled labour will...
Photo: ContributedI have the pleasure of witnessing people delegate tasks quite often. Sometimes with tremendous success and sometimes with disastrous consequences. I have chaired a lot of committees...