The French Minister of the Economy and Finance, Mr Dominique Strauss-Kahn, has promised lower taxes, higher growth and more jobs in his budget for 2000.
Mr Strauss-Kahn said the budget he presented to the cabinet yesterday reconfirmed the top priority given to employment since the left came to power in June 1997.
The French budget is still calculated in francs rather than euros, but Mr Strauss-Kahn insisted that it was European. "The euro was an effective shield during the international crisis of the past year," he said. "The euro has enabled us to enact a new policy mix that favours growth."
For the first time in 20 years, France's "spiral of debt" would be reversed in 2000, when economic growth would reach 2.8 per cent and the budget deficit would drop to 1.8 per cent, Mr Strauss-Kahn predicted.
At his press conference, the Finance Minister repeatedly produced charts showing that the government, led by the Prime Minister, Mr Lionel Jospin, has performed better than its European partners - and better than its right-wing predecessor. Of the six biggest European nations, France held the record for deficit reduction since 1997 - -1.7 per cent, compared to -1.6 per cent for Britain and -0.7 per cent for Germany - he said. Under the previous government, led by Mr Alain Juppe, France's deficit was the fastest-growing in Europe.
At the same time, economic growth in France had been above average for the euro zone and twice the rate of growth in Germany and Italy, Mr Strauss-Kahn said.
Employment had risen 3 per cent in France since 1997, compared to 1 per cent in Italy and stagnation in Germany. This translated into 220,000 new jobs this year and an estimated 300,000 new jobs in 2000 - five times the number created annually in the 1980s.
The left-wing government has raised the minimum wage 6 per cent since 1997, and buying power has increased by an average 4 per cent. Healthy domestic demand will cushion France from global setbacks.
Economic growth was now "strong and long-lasting", Mr Strauss-Kahn claimed.
In the future, he believed the US "engine" would be less important to the world economy. "In 2000, growth in the euro zone should surpass that in the US . . . If the 1990s was the decade of American prosperity, I am convinced that the next decade can mark the return of European power."
Under the Jospin government, a "virtuous circle" has been established whereby economic growth inspires confidence, which stimulates consumption, which further increases growth and creates jobs.
There is to be no real increase in government spending in 2000, so the fruits of economic growth will be split one-third for deficit reduction and two-thirds - or Ffr 39 billion (€5.95 billion) - in lower taxes. The biggest drop, to 5.5 per cent from 20.6 per cent in VAT on building maintenance and improvements, should help a third of French households and discourage black market labour.
To simplify taxation, Mr Strauss-Kahn is eliminating 49 categories of taxes on everything from bowling balls to registration for school and university exams. He is also doing away with 5.2 million government tax forms.
Despite some lower indirect taxes, Mr Jospin's government has failed to keep its promise to reduce prelevements obligatoires (monthly taxes and charges paid by employers and employees). President Jacques Chirac yesterday expressed concern that these payments - much hated by the business community and among the highest in Europe - reached a record of 45.2 per cent of GDP this year.
Mr Strauss-Kahn promised direct taxes would begin falling in his 2001 budget.
