France pledges to slash budget despite US warnings

22nd June 2010, Comments 0 comments

French Finance Minister Christine Lagarde vowed to forge ahead with spending cuts Tuesday despite warnings from the United States that Europe's budget slashing could derail the global recovery.

"Balancing our public finances is a priority," Lagarde told the Wall Street Journal, flying in the face of President Barack Obama's demands that any cuts must wait until the recovery is assured.

"The road is arduous, but our political determination is complete," she said, addressing an issue that looks set to dominate a meeting of G20 countries in Toronto this weekend.

Earlier this month France's center-right government announced that it intended to slash public spending by 100 billion euros (124.0 billion dollars) in the next three years, achieving half of this by cutting spending and half with new revenues.

European countries on Tuesday dismissed plaintive US cries that slashing budgets too quickly would threaten the fragile recovery.

Britain announced the heaviest cuts in a generation, slashing billions more from public spending, raising taxes and even announcing reform of funding for the Queen's household in a radical and symbolic policy swing.

German Chancellor Angela Merkel also revealed she had told the US president that he had got it plain wrong.

"Yesterday, during a phone call with Barack Obama, I told him how important budgetary consolidation was," Merkel said.

She added she did not believe savings measures she has announced for Germany, amounting to some 80 billion euros (98 billion dollars) from next year until 2014, "would slow down the global economy."

© 2010 AFP

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