France to freeze spending for three years

6th May 2010, Comments 0 comments

France will freeze public spending for three years from 2011 to 2013 to get its soaring budget deficit down, Prime Minister Francois Fillon said on Thursday.

"For the three years to come, state spending excluding interest charges on the debt and spending on pensions will be frozen," said a statement from Fillon's office after he met with ministers.

Like most European Union countries, France has seen its deficit exceed the EU limit of three percent of output as it has taken costly measures to ease the economic crisis. Its deficit is expected to hit eight percent this year.

The government has set targets to reduce it to six percent in 2011 and get it under the three percent required by EU regulations in 2013.

Government spokesman Luc Chatel said Thursday the sweeping cuts will affect "all French people."

He said however there would be no austerity measures nor a "massive rise in taxes which would choke the economy."

The government is already planning to make cuts by not replacing one in every two retiring civil servants. It faces a tough battle with unions meanwhile over its plan to raise the retirement age and reform pensions.

Fillon said on Wednesday that he also aimed to save five billion euros over two years by cracking down on tax havens.

© 2010 AFP

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