France targets €28bn in two-year budget savings

France aims to make budget savings of around €28 billion over the next two years to restore public finances to order, finance minister Pierre Moscovici said today.

The government is struggling to find the right balance between belt-tightening and tax increases as it seeks to rein in the public deficit without hitting the already faltering economy.

Speaking ahead of a parliamentary debate on next year’s budget, Mr Moscovici said that the government wanted savings of €14 billion in 2014.

“This government will keep a tight grip on spending,” Mr Moscovici said on BFMTV, adding that in 2015 savings “of the same order” as in 2014 were planned.

President Francois Hollande’s government has raised taxes since it came to office in May 2012, but he has since promised the focus would shift towards belt-tightening over the rest of his five-year mandate.

Mr Moscovici acknowledged that some tax would nonetheless have to rise in order to restore the public accounts, though he said it was too early to say which ones would be targeted.

After a series of tax hikes on companies since Mr Hollande came to office, Mr Moscovici said that corporate taxation would have to be mindful of not undermining firms competitiveness.

The government hopes to keep the public deficit to 3.7 per cent of economic output this year, though Mr Hollande has said it may come out higher because of weak growth and dwindling tax revenues.

Reuters