PARIS (MNI) – The austerity program to be unveiled Monday by French
Prime Minister Francois Fillon will be “balanced between outlays and
revenues” and will not demand that employees work an additional day
without pay, Finance Minister Francois Baroin said Sunday.
Baroin hinted in a radio interview that the package would include
measures amounting to E6-8 billion, although the calculation he proposed
suggested that a larger amount would be needed, given the expected
slowdown in economic activity.
Since the 2012 budget was presented in September, the official GDP
growth assumption has been revised down from 1.75% to 1%. One point less
growth has a budget impact of around E20 billion, the minister
estimated.
Asked whether he reckoned with a recession next year, as ECB
President Mario Draghi suggested last week, Baroin said, “No, today no
— clearly no.”
“We are adapting to the economic slowdown,” he insisted.
The minister reiterated that the government’s deficit targets will
not be altered whatever happens to the economy. “I’d say the question is
not so much to know whether we will have 1% growth. The question is
whether we are reactive enough to adapt” policies to hit these [deficit]
targets, he said.
Ahead of Fillon’s presentation, Baroin declined to confirm that the
austerity measures would include a hike in the value-added tax rate for
restaurants or home repairs from the current level of 5.5% to 7% or
more, as a number of leaks have suggested.
The longer-term fiscal goal of the government is to bring public
finances into balance by 2016, Baroin reminded. He expressed confidence
that the center-right coalition of President Nicolas Sarkozy would come
from behind to win next year’s elections.
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