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Dijon Sells Wine Stock as French Economic Slump Hits Budget

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Jan. 29 (Bloomberg) -- A French town is raiding the wine cellar to try and plug the gap in its budget.

The eastern city of Dijon, the capital of the Cote-d’Or department and of the Burgundy region, held a sale on Jan. 27, auctioning 3,500 bottles of wine -- some of them billed as “rare and prestigious” -- to pay for emergency social services.

“The sale of the wine was exceptional in more ways than one,” the mayor’s office said in a statement on its website. “It’s a first for the city” and 80 percent of the receipts will be used for Dijon’s communal center for social action, or CCAS, with the rest used to replenish the wine stock, it said.

The auction comes as President Francois Hollande works on shrinking the country’s budget deficit, bringing it down to 3 percent of gross domestic product this year from 4.5 percent last year. He has called on local governments to tighten their belts after pledging in November to cut public spending by 60 billion euros ($81 billion) over five years.

Dijon sold half the stock in its wine cellars, raising 151,620 euros ($203,929). The highlight was a bottle of Vosne Romanee Cros Parentoux premier cru of 1999 produced by Henri Jayer that had a price tag of 1,000 euros. It was sold at 4,800 euros. The auction at the Palais des Ducs de Bourgogne drew buyers from France and overseas, the mayor’s office said.

The sale came against the backdrop of comments from French Labor Minister Michel Sapin, who on the day of the auction said in a radio program that France was “totally bankrupt,” setting off a storm.

‘Totally Bankrupt’

Asked on Radio J about Former Prime Minister Francois Fillon’s comment in September 2007 that France was a “bankrupt state,” Sapin said, “But it’s a totally bankrupt state,” adding “that’s the reason we have to put deficit-reductions programs in place.” The minister immediately took back the statement, saying he was being “ironic.”

France’s economy is expected to have contracted in the fourth quarter of 2012 and the first three months of this year and is set to post no growth in 2013, according to Bloomberg surveys.

Sapin said he wanted to point out that “there’s a social and economic emergency,” requiring the government to act quickly to boost growth and address an unemployment rate that’s at 10.3 percent.

To contact the reporters on this story: Vidya Root at vroot@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

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