France gets a €30bn austerity shock from François Hollande U-turn



President François Hollande, confronted with a floundering economy and shrinking popularity ratings, has promised to put France back on its feet within two years.

In a live television interview billed by the media as a "re-launch" of his four-month-old presidency, Mr Hollande warned that France faces €20bn (£16bn) in tax rises and €10bn in spending cuts next year.

Mr Hollande has been criticised for being too indecisive and detached, but on Sunday night he presented himself as an active, personally engaged leader who could rescue France from deep economic crisis by 2014.

"I am in a battle … two years to create a policy for work and competitiveness. I am accelerating," he said. "I know where I am going. I will assume all the responsibility and I will talk regularly to the French people."

In other words, Mr Hollande, who had sworn to abandon the frenetic, can-do style of his predecessor, Nicolas Sarkozy, promised to be more like Mr Sarkozy. His performance was criticised on the right as limp and vague and aroused fears in his own left-wing camp of a shift towards austerity and market-opening reforms.

Of the €30bn needed to reduce France's state deficit next year to the eurozone target of 3 per cent of GDP, Mr Hollande said two-thirds would come from tax rises. This would include his threatened 75 per cent tax on income over €1m. Sports and film actors would not be exempted but earnings from productive investments would be.

President Hollande gave little detail of how €10bn would be cut from the draft 2013 spending plans – already billed as the most austere for three decades. He spoke only of a freeze on hiring in all government departments, save those dealing with security and education. It was announced yesterday, however, that a series of high-profile cultural projects launched by Mr Sarkozy would be scrapped.

During his election campaign, Mr Hollande suggested he could cut the budget deficit while promoting growth, a magic formula that has eluded all other developed economies. Since his victory, the economy has slowed to a standstill and unemployment has topped 10 per cent. As a symbol of his new blood, sweat and tears approach, Mr Hollande said the government would lower its growth forecast for 2013 from 1.2 per cent to 0.8 per cent.

Start your day with The Independent, sign up for daily news emails
Life and Style
A monstrous idea? Body transplants might no longer be science fiction
Science An Italian neurosurgeon believes so - and it's not quite as implausible as it sounds, says Steve Connor
Demba Ba (right) celebrates after Besiktas win on penalties
footballThere was no happy return to the Ataturk Stadium, where the Reds famously won Champions League
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
arts + ents
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
arts + ents
ebooksA special investigation by Andy McSmith
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
arts + ents...begging to differ, John Walsh can't even begin to number the ways
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Bookkeeper

£23000 - £26000 per annum: Recruitment Genius: This small, friendly, proactive...

Recruitment Genius: Photographic Event Crew

£14500 - £22800 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Software Developers - .NET / ASP.NET / WebAPI / JavaScript

Negotiable: Recruitment Genius: A Software Developer is required to join a lea...

Austen Lloyd: Corporate Tax Solicitor - City

Excellent Salary: Austen Lloyd: A first rate opportunity to join a top ranking...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower