09 November 2009 - 13H59
European Commission to ask France to slash public spending
A report set to be approved by the European Commission recommends that France step up efforts to shrink public spending in response to the country’s structural deficit and exploding debt.
By FRANCE 24 (with wires) (text)
The European Commission is expected to recommend that France step up its efforts to shrink public spending starting in 2011 in response to the country’s structural deficit and exploding debt.
In a document set to be approved by the commission on Wednesday, the EU's executive body recognised that France’s shrinking monetary reserves are an outcome of the global financial crisis, but chides Paris for not having ensured it had sufficient reserves beforehand.
The commission report predicts a deficit of 8.3 percent of France's GDP for 2009, due to a sharp drop in tax revenue that is itself due to declining growth. It predicts an additional 5 percent deficit in 2013 if France does not accelerate cost-cutting measures.
The commission rules out funding public spending by raising taxes because France’s taxes are already among the highest in the European Union. Instead, it recommends cutting national healthcare costs and budgets for local governments.
The commission also criticised the public loan scheme launched by President Nicolas Sarkozy, saying that it could “deteriorate [the country’s] budgetary position if it was not compensated by other measures”.
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