Brussels, 10/09/2012 (Agence Europe) - The French President, Francois Hollande, announced on television on Sunday that French growth forecasts for 2013 have been revised down from 1.2% to 0.8%, and on Monday 10 September, a spokesperson for Commissioner Olli Rehn said that this had not generated any tension between Paris and the Commission. The spokesperson welcomed France's very firm determination over budget issues and the new government's unambiguous commitment to reduce the deficit to below 3% next year, as was agreed with its European partners.
The spokesperson added that the target was not an end in itself but a key component of sustainably correcting public finance, reducing France's public debt and freeing up resources so they can be used for growth stimulus. The Commission will not comment on the measures themselves until the details of the French budget for next year are published at the end of the month. In November, the European Commission will publish its Autumn Economic Forecasts, which Hollande expects to be slightly higher than 0% for France.
In order to reduce public debt to 4.5% of GDP this year and 3% next year, the French government will have to introduce stringent spending cuts, the like of which have not been seen for thirty years, said Hollande. The French government say that €30 billion of cuts will take the form of €10 billion of spending cuts and €20 billion in tax increases (half from industry and half from individuals).
The French president gave details of a new, symbolically important, tax to temporarily levy a 75% tax on all income above €1 million. The recent request by France's richest man, head of the LVMH company Bernard Arnault, for Belgian nationality is in response to this move, which has come in for heavy criticism from the French right and has been described by business groups as counter-productive. French economy minister Pierre Moscovici said that the tax agreement between France and Belgium will have to be revised. (MB/transl.fl)