PRESIDENT NICOLAS Sarkozy’s government cut its 2011 growth forecast to 2 per cent yesterday, bringing it closer to that of private sector economists, and said reducing a large fiscal deficit was France’s top priority.
In a statement issued after Mr Sarkozy held emergency talks with senior ministers on the 2011 budget, the government said it would eliminate €10 billion in tax breaks and pledged to avoid unpopular increases in income, value-added and corporate taxes.
Mr Sarkozy, whose popularity is near record lows ahead of an election in 2012, convened the talks with prime minister Francois Fillon and economy minister Christine Lagarde just days after the Moody’s ratings agency warned that France – and several other top-rated nations – was inching closer to losing its AAA rating.
Mr Sarkozy’s conservative government has told Brussels it will reduce its deficit from around 8 per cent of GDP this year to 3 per cent by 2013, implying some €100 billion in savings. It has yet to detail where much of those savings will come from.
“The president said that cutting the public deficit to 6 per cent of GDP by 2011, whatever the level of economic growth, is the main objective of the country,” said the statement from the Elysée presidential palace.
“Reducing the deficit must be achieved by cutting public spending as a priority. Neither income tax, VAT or corporate tax will be increased.”
The government said France would meet or exceed its 1.4 per cent target for growth this year. – (Reuters)
