France will freeze spending in bid to reduce €95bn deficit
Published 29/09/2011 | 05:00
France will freeze government spending next year for the first time since the end of World War Two.
The unprecedented move comes as the country is under pressure to reduce its €95.5bn budget deficit and retain its AAA credit rating.
The French government will also raise taxes on the rich as part of a tough 2012 budget intended to convince nervous markets of its determination to bring public finances under control.
President Nicolas Sarkozy told his cabinet the target of reducing the budget deficit to 3pc of gross domestic product in 2013 was "untouchable" and would be met "to the last euro".
Yesterday's French budget incorporated €12bn in tax hikes and savings announced in August, including increased social charges on capital income and higher taxes on property investment gains.
A further 30,400 public sector jobs will go under a scheme that freezes the replacement of one out of every two retiring civil servants -- bringing the total number of posts left vacant to 150,000 over five years.
But economists said the cuts were not substantial enough to meet the government's deficit targets.