Council of Ministers agree 2013 budget
The Council of Ministers approved France’s budget for 2013 yesterday.
The government is trying to clear a €30 billion black hole in the economy and in the process has been forced to drop one of President François Hollande’s key election pledges not to force austerity measures on the country.
The budget will see a rise of €15.8 billion in tax increases including €9.6 billion for business and €6.2 billion for households. €4bn will be raised by reducing exemptions on company debt interest payments. Two new taxes will be introduced, a 45% higher tax rate and a 75% tax rate on millionaires; the two taxes are expected to bring in around €500 million next year.
There will also be savings in government expenditure of around €12.5 billion. €2.5 billion will be on health spending and €10 billion will come from a pay freeze, cancellation of major projects and savings on agency costs across all ministries.
The economy is expected to grow by 0.8% next year and 2% each year from 2014 to 2017. The deficit is forecast to fall to 3% of GDP in 2013, 2.2% in 2014 and 1.3% in 2015.
A trawl through all of the main newspapers suggests that there is widespread criticism of the budget from rich and poor alike as well as economists and business as well as the inevitable attacks from the main opposition party. François Hollande’s opinion poll ratings have plummeted in the last two months and they are likely to drop further on the back of the budget. Also expect a series of major strikes across the country.