French PM promises to balance budget by 2012

François Fillon announced that economic reform efforts had "borne fruit", promising to reign in the bloated deficit as protests grow in France.


French Prime Minister Francois Fillon struck an upbeat note on the economy Sunday, promising his reform-minded government would cut its budget deficit to 2.0 percent in 2009 and balance the budget by 2012.

Growth figures for 2007 and the first quarter of 2008 issued last week had shown that "our economic reform efforts since the start of (President) Nicolas Sarkozy's term of office have born fruit," Fillon said Sunday after a closed door meeting with ministers to set the agenda for coming months.

Sunday's meeting occurred against a backdrop of growing unrest in France against planned government reforms.

The government would push on with reforms in the latter half of this year to ensure a balanced budget by 2012, Fillon told journalists.

"We will continue along this path making the second half of 2008 one of structural reforms -- the only way to achieve our aim of a balanced budget because it will enable us to maintain the dynamic of the French economy while reducing the weight of public debt," he said.

"From 2009 on we have one absolutely fixed target: a deficit limited to two percent of gross domestic product."

The European Union Commission has said it was preparing a formal warning to Paris about its finances, citing forecasts that France could see its public deficit rise to 2.9 percent of output this year and then hit 3.0 percent in 2009.

That would put it perilously close to breaking an EU deficit limit of 3.0 percent. France takes over the EU presidency in July.

Meanwhile more than 20,000 French high school students, parents and teachers marched in Paris on Sunday against plans to cut thousands of jobs in education.

Unions fiercely oppose plans to cut 22,900 civil servants' jobs including 11,200 in education this September, and another 35,000 next year, mostly by not replacing retiring employees.

Sunday's rally came three days after a major strike in which hundreds of thousands of teachers and civil servants walked off the job in protest, and ahead of a fresh public sector strike on Thursday.

Sarkozy campaigned for the presidency last year on a plan to trim down the civil service as part of a broader plan to overhaul the state and reduce public spending.

Government spokesman Eric Chatel also struck an optimistic note: "The French people expect movement and change, and the government is working on that."

Several major reforms are on the agenda at the National Assembly in the next two months, including constitutional reform, legislation to modernise the economy and an overhaul of labour union representation.

Last week the government proclaimed its reforms were working after new data on Thursday showed better-than-expected growth in 2007 and an economic pickup in the first quarter.

The French economy grew last year by 2.1 percent, after seasonal adjustment, up from a previous figure of 1.9 percent, the INSEE statistics institute said.

Growth in the first quarter 2008 was unexpectedly strong at 0.6 percent, up from 0.3 percent in the final quarter of 2007.

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