It sounded too good to be true. The French government has devised a

"moderate, balanced, fair and simple" plan to meet the Maastricht criteria for EMU, the finance and industry minister, Mr Dominique

Strauss-Kahn, told journalists yesterday.

Individual French taxpayers will not spend an extra franc because the government is afraid of braking consumer demand. Big business will pick up most of the tab, with a 15 per cent increase in the tax on corporate profits.

Two magistrates had just presented their audit of government finances to the Prime Minister, Mr Lionel Jospin. Mr Jospin requested the audit when he took office last month. It shows that if France does not change course, its 1997 budget deficit will be between 3.5

and 3.7 per cent, surpassing the 3 per cent limit imposed by the

Maastricht Treaty and aspired to by the previous right-wing government of Mr Alain Juppe. The Juppe government had "not told the public the real situation", Mr Strauss-Kahn said. First half revenue fell short of projections by between Ffr20 billion and Ffr23 billion, while spending exceeded plans by between Ffr12 billion and Ffr21

billion. Any way you look at it, the government needs at least Ffr32

billion to approach the magical 3 per cent deficit ceiling.

It will do so with two simple measures, Mr Strauss-Kahn said. A

"temporary" two-year increase from 36.6 per cent to 41.6 per cent in business taxes will raise Ffr22 billion in revenue. And between now and the end of the year, the state will cut spending by Ffr10

billion.

The business tax will concern only companies with an annual turnover of more than Ffr50 million, that is to say fewer than 20 per cent of French companies. Most developed countries charge higher corporate tax than France, Mr Strauss-Kahn noted. Last year, the profits of big French companies exceeded their investments by Ffr134

billion, and it was from this sum that the government was extracting

Ffr22 billion in new taxes. Big business wants the euro, he said, so it was only fair that they should pay for it.

Twenty per cent of the spending cuts will come from the defence budget. Mr Strauss-Kahn said, contrary to predictions, big weapons programmes like the Rafale fighter aircraft will not be affected. He could not say which ministries would make the other Ffr8 billion in cutbacks, only that he was committed to the savings. "The details will evolve over the next five months," he said.

Mr Strauss-Kahn said the government's entire strategy was based on one priority: "to put the economy at the service of employment"; 12.5

per cent of the French work force is unemployed. Three objectives followed from that priority - to achieve economic growth by encouraging consumer demand; to reorient public spending in favour of employment; and to build a powerful Europe.

"We want to achieve the single currency on schedule," Mr

Strauss-Kahn said. "In a world where commercial and financial relations are dominated by a single currency. . . the euro will enable us to redress the balance for French as well as European companies and employees."

But German diplomats attending the press conference said they still had the impression that the new French government is less committed to EMU than its predecessor.

The German position is that the Maastricht Treaty says 3 per cent, and that means exactly what it says - not somewhere between 3.1 and

3.3 per cent as indicated by Mr Strauss-Kahn's calculations - one commented to The Irish Times. They nonetheless agreed with the

French finance minister that somehow, the euro will come into being on January 1st, 1999.

In Bonn, the German finance minister, Mr Theo Waigel, welcomed the

French announcement, saying that France was "aware of its responsibility not to stop at 3.5 or 3.6 per cent of GDP".