“Reality has struck,” Fillon said in Morzine, in the French Alps, according to a copy of his speech. The government doesn’t have “hidden treasure” to finance record public spending and will soon adjust growth forecasts.
France’s budget deficit will be cut by 20 percent in 2012 from 113 billion euros ($156 billion) this year, Fillon said. The shortfall will narrow by 45 billion euros next year with half the savings coming from spending cuts and the rest by boosting government revenue, including plugging tax shelters, he said.
The French government is preparing to announce another set of austerity measures on Nov. 7 that could include a new rate of value-added tax for sectors like restaurants as well as one less annual holiday a year for workers, according to a report on the website of the weekly magazine L’Express. Details of the budgetary measures will be decided this weekend and unveiled after a cabinet meeting in two days, the report said.
Fillon and government leaders including Finance Minister Francois Baroin and Budget Minister Valerie Pecresse were meeting today with President Nicolas Sarkozy to decide on details of the measures, the LCI television station reported.
“Through these efforts, we will remain one of the 10 countries in the world with the best financial credibility,” Fillon said today. The euro must be preserved, and the European crisis has revealed a “serious failing of governance.”
“There is no other recipe to reduce debt than to lower public spending,” he said. “The only worthy program for 2012 is to balance public finances.”
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