France's centre-right government will curb civil service spending, scrap tax breaks and otherwise count on accelerating economic expansion to replenish public coffers in 2011 under a budget bill unveiled today.
Budget documents obtained by Reuters showed the government aimed to contain total spending at €286.4 billion, €714 million higher than in 2010. France's overall debt burden will hit 86.2 per cent of national output in 2011 and peak in 2012 under the government's plan.
Wary of voter dismay over pension reform as he heads towards elections in early 2012, President Nicolas Sarkozy is seeking to honour deficit-reduction pledges without the degree of austerity that Spain, Britain, Ireland and others are programming in to see off this year's debt market crisis.
The chief objective of the bill is to cut the public deficit to 6 per cent of gross domestic product in 2010 from 7.7 per cent in 2010, in the first phase of a plan to trim the shortfall to to the EU's 3 per cent ceiling in 2013, and 2 per cent in 2014.
It must convince financial markets that France is serious enough on deficit control to keep the triple-A credit rating that allows it to service its debt at low cost, while not scaring consumers over their future incomes as the country emerges from the world's worst recession since the second World War.
Economy Minister Christine Lagarde is due to explain the bill at a news conference later today. But the budget documents, obtained by Reuters from a parliamentary source, showed the main details were as expected after weeks of drip-fed revelations that limited the suspense for voters and investors.
It is a delicate exercise when Mr Sarkozy's popularity ratings are near rock bottom and his government faces yet another wave of street protests and strikes over plans to raise the retirement age to 62 from 60, the flagship reform of his presidency.
A majority of French people oppose the pension reform and are unhappy with the government's economic policies in general, according to opinion polls.
Reuters