France heading for spending freeze: PM 02/04/2008 00:00

French government plans to slap a freeze on public spending for the next five years and make savings across the board.

   PARIS, April 2, 2008  - The French government plans to slap a freeze
on public spending for the next five years and make savings across the board,
Prime Minister Francois Fillon said on Tuesday.
   Fillon, who has had to face up to disappointing figures on public finances
in recent days, told French radio that "everyone must make efforts" to rein in
public spending.
   Fillon recalled that President Nicolas Sarkozy had promised during his
election campaign last year "to freeze public spending for five years."
   "This freeze of public expenditure is what we are putting into effect," he
told France Inter radio.
   Asked where the savings would be achieved, he replied: "We are going to do
this everywhere."
   "Everybody must make an effort," he added.
   Fillon insisted that the economy was improving regarding employment and
household consumption which "continues to increase".
   The French economy had strong assets to face up to the international
crisis, he said, but he acknowledged that France had a "historic" situation
regarding overspending and "a degree of immobility."
   The economy ministry last week revised up its forecast for the public
deficit this year to 2.5 percent of gross domestic product after fresh data
showed the government missed its target for 2007.
   The government had previously forecast a total spending deficit for this
year equal to 2.3 percent of GDP.
   The gap in the deficit comes as France prepares to take over the presidency
of the European Union in July, facing calls from its euro-zone partners to
rein in spending and balance its budget by 2010.
   The opposition Socialists have accused the government of preparing an
austerity plan for France that will hit lower-income classes hard.
   But Fillon has rejected the claims, saying that his government is not
considering a tax hike or wholesale cuts in social programmes.
   The government is planning to cut 35,000 public service jobs in the 2009
budget by not replacing half of the retiring civil servants.
   Eurozone governments have committed to balanced budgets by 2010 but Sarkozy said in July after his election that France might miss the deadline and
instead aim to get rid of the deficit by 2012.
   Under European Union fiscal rules, member-states have committed to keeping their deficits under the bar of 3.0-percent of GDP.
   The rules say that to qualify to join the eurozone a country must have a
debt of accumulated past deficits of no more than 60 percent of annual output
or be falling structurally to this figure.
   France's total public debt amounted to 64.2 percent of output for 2007 as
expected but in excess of an EU limit of 60 percent.
   The Growth and Stability Pact states that in times of growth EU governments
should be working towards public surpluses, thereby being able to reduce their
debt.

AFP