France not planning third austerity programme: PM

6th December 2011, Comments 0 comments

France is not planning a third programme of spending cuts and tax hikes, Prime Minister Francois Fillon said Tuesday, a day after its top triple-A credit rating was put under review.

"There won't be a third austerity programme," said Fillon after Standard and Poor's warned that the government's planned measures may be insufficient to meet its deficit target of 4.5 percent of GDP.

Standard and Poor's also warned the French government's forecast of economic growth of 1.0 percent next year is too high, saying it expects France to grow by only 0.5 percent in 2012.

Standard and Poor warned France and 14 other eurozone nations including Germany that their credit ratings are at risk of being downgraded over the festering eurozone debt crisis.

Fillon later clarified that the French government would not adopt another austerity plan based on its current forecasts, but would wait to see how events progress.

"If we have to go further, if other measures must be taken, then the government will take them, but we won't take them based on growth forecasts," but rather "when we know growth (achieved) in the first quarter of 2012)."

The French government has sought to reassure investors and maintain its triple-A rating with a series of austerity measures, including the announcement last month of 65 billion euros ($87 million) in savings by 2016, on top of a 12-billion-euro deficit-cutting package announced in August.

The government has said it needs to make 100 billion euros in savings to balance the budget by 2016.

© 2011 AFP

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