Latest update: 20/08/2010
Sarkozy to cut 10bn in tax rebates following gloomy figures
President Sarkozy will abolish around 10 billion euros in tax breaks after top ministers warned him that growth in 2011 will be lower than previously expected at a meeting on Friday.
By News Wires (text)
AFP - France has cut its growth forecast for next year to two percent from 2.5 percent, President Nicolas Sarkozy's office said Friday, after he met senior economic officials.
A government statement said it expects France's gross domestic product to "meet or exceed" this year's target of 1.4 percent but that economic growth in 2011 would be slower than had been hoped.
France -- Europe's biggest economy after Germany -- has begun to recover since shrinking 2.5 percent last year but the International Monetary Fund had warned that its growth forecasts were too optimistic.
The government has pledged to narrow the public deficit, covering central and regional government spending along with social welfare, from a record 8.0 percent of GDP this year to 6.0 percent in 2011.
But at the same time, Sarkozy has promised not to raise general taxation.
Friday's statement promised to abolish around 10 billion euros per year in tax breaks for specific groups and professions, while freezing public spending and maintaining a policy of only replacing only one retiring public servant in two.