French prime minister vows to cut budget deficit in five years without draconian public spending cuts

 

Paris

French President François Hollande enjoyed a moment of light relief at a military ceremony in the Hôtel des Invalides in Paris yesterday as his Prime Minister tended to the serious matter of how the nation will attempt to plug the €40bn black hole in its finances over the next 18 months.

Despite gloomy warnings from the country’s official financial watchdog, Jean-Marc Ayrault said that increased taxation on the wealthy and big business, plus a partial freeze on state employment, would be sufficient to bring French public finances under control.

In his first “discours de politique générale" – the French equivalent of the Queen’s Speech in Britain – Mr Ayrault used the word “austerity” only to reject it. He told the left-dominated, national assembly elected last month that the watchwords of his government would be “fairness”, “reconstruction” and “discipline”.

To the surprise of some commentators – and the frank disbelief of others – Mr Ayrault said that an official audit this week showing a €40bn black hole in French finances over the next 18 months was “no surprise”. He said that President François Hollande knew that growth would be lower, and public finances worse, than the previous centre-right government had predicted.

The five year programme that Mr Ayrault outlined to parliament was therefore little different from the promises, and vague warnings of cuts, given by Mr Hollande during his election campaign. Income tax on the rich will be increased, with a new 45 per cent band and a 75 per cent marginal rate on all earnings over €1m. Tax breaks for the wealthy and large businesses will be abolished.

An increase in VAT on some manufactured goods, planned by the Sarkozy government, will be scrapped. The hiring of state employees will be banned, except in “priority” areas such as education. Although Mr Ayrault made no specific reference to it in his speech, he has also indicated that the “total cost” of  civil service salaries will be frozen.

Despite forecasts to the contrary, there will be no “turning of the screw”, Mr Ayrault said. “I demand seriousness. I demand fiscal responsbiility. But I refuse austerity.”

The new French government has reduced its predecessor’s official predictions for economic growth – in line with independent forecasts – to 0.3 per cent this year and 1.2 per cent in 2013. Nonetheless, Mr Ayrault insisted that his tax and spending plans would allow the state deficit to be reduced – to meet European Union guidelines - to three per cent next year and to zero by 2017.

To those on the Left who believe a left-wing government should ignore deficits and debts, Mr Ayrault pointed out that the accumulated French state debt was now nearing 90 per cent of the country’s annual income or GDP. “An indebted France is not an independent France but a dependent France,” he said.

The prime minister said that, despite the gloomy fiscal situation, his government would go ahead with Mr Hollande’s promise to create 60,000 teaching jobs in five years. It would also summon conferences on education, employment and the environment and produce a report in the next few days on rolling back, the “de-industrialisation” of France.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive or Senior Sales Executive - B2B Exhibitions

£18000 - £30000 per annum: Recruitment Genius: A Sales Executive or Senior Sal...

Recruitment Genius: Head of Support Services

£40000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Warehouse Team Leader

£22000 per annum: Recruitment Genius: This industry leading company produces h...

Recruitment Genius: Business Development Manager / Sales - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: This IT provider for the educat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future