PARIS (MNI) – Budget cuts being implemented by France’s government
to cut the public deficit will not harm economic growth, contrary to the
warnings of many observers, Prime Minister Francois Fillon said Friday.
In a press conference to explain the government’s pension reform
and deficit reduction measures, Fillon acknowledged the concerns being
raised by some that the cuts in public spending could “brake growth.”
“I say it is completely the opposite,” Fillon said. He noted that
deficits are a “source of concern” for the future and that if there is
not swift and firm action to address them and restore confidence, it
could force choices later on that would be “clearly against growth and
aainst development” of the French economy and employment.
“The effort being made on public spending is categorically
imperative; it is the only way to avoid tax increases,” Fillon warned.
Fillon said the government’s forecast of 2.5% growth from 2011 to
2013, which is a key assumption in its three-year deficit cutting plan,
is “ambitious.” But he said it was “too early” to revise it. He
reiterated, as did Finance Minister Christine Lagarde earlier Friday,
that the government would wait for second quarter GDP figures in August
to decide whether or not to modify the figure.
He argued, however, that experience has shown instances of
stronger-than-expected growth following big economic downturns.
Nonetheless, “if the figures show that the economy is less dynamic
than expected, we must not shrink from taking the extra measures needed”
to tame the country’s deficit, Fillon said.
He said, among other things, that savings on tax loopholes
originally slated at E5 billion could be raised to E8.5 billion.
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–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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