In a keynote speech to French lawmakers, Prime Minister Jean-Marc Ayraut declared that, despite a need for fiscal discipline, his government would push forward with planned spending measures.
French Prime Minister Jean-Marc Ayrault announced on Tuesday that his government would push forward with President François Hollande`s tax-and-spend campaign programme, despite a need for the country to cut tens of billions in euros from its budget over the next two years.
Speaking to newly-elected MPs in a televised keynote speech, Ayrault said his government would not veer from its course, pledging to steadily rebalance the country`s budget over the next five years, but without implementing austerity measures.
"I support budgetary strictness and responsibility… but I reject austerity," the prime minister thundered in the National Assembly, a day after the state auditor told his new Socialist government that it must find 6-10 billion euros in 2012, and a staggering 33 billion in 2013 to meet its European deficit targets.
Ayrault, who fought through constant heckling from UMP lawmakers, now the main opposition group, said that although France faced an alarming situation, the verdict from auditors was no surprise. Regarding growth forecasts, he said France's GDP this year was likely to be 0.3 percent, rather than the 0.7 percent previously announced, and growth estimates for 2013 were being cut from 1.75 percent to 1.2 percent.
Last month, Ayrault`s Socialist Party won an absolute majority in parliamentary elections, giving ample room for Hollande to pass promised reforms.
The prime minister delivered thinly veiled shots at France`s previous conservative government, chiding them for knowingly overvaluing growth targets, weakening state institutions, and calling for the so-called “golden rule” on fiscal dicipline.
Millionaires to be taxed at 75%
During his speech, Ayrault confirmed that his government would hire more teachers and police, and levy higher tax rates for France`s highest earners.
"For the wealthiest, a new tax bracket at 45 percent [of personal income] will be created. For annual incomes above one million euros, a 75 percent tax rate will be imposed, " Ayrault explained, adding that big banks and oil companies would also be taxed more.
PM not taking risks with unpopular measures, says French researcher Bruno Cautres
Invoking patriotic sentiment he pledged his government would go to battle against tax evaders and frauds.
He also promised the lower and middle classes would be spared from new taxes and announced his government would rescind a consumer tax hike on books and performance art shows that was put in place by the government of Nicolas Sarkozy.
As for France’s struggling automobile industry, the government intend to reveal a rescue plan this month, Ayrault said.
The prime minister called on his ministers to slim down their individual budgets through personal proposals, but offered little details about where real budget cuts would come from.
Date created : 2012-07-03