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France to make five billion euros cuts in 2014

media French Prime Minister Jean-Marc Ayrault Reuters/Charles Platiau

France is to make five billion euros-worth of cuts in 2014 in a continuing austerity cure that saw 12.5 billion euros slashed from budgets and 36.9 billion in tax increases this year.

Prime Minister Jean-Marc Ayrault on Friday asked ministers to draw up proposals for five billion euros-worth of savings without shedding jobs, since the Socialist government has promised to keep public-sector employment stable.

Dossier: Eurozone in crisis

The savings can be made by “ambitious structural reforms”, Ayrault said in his letter to ministers.

The cuts are part of the government’s efforts to bring France’s debt down to the EU-stipulated three per cent of GDP by 2017.

The 2013 budget, the first full year’s drawn up since the Socialists came to power last year, set targets of cutting 10 billion euros from state spending and 2.5 billion euros from health insurance payouts.

It set a target of raising 10 billion euros from tax rises on companies and 10 billion from rises for individuals, including a 75 per cent tax on incomes once they reach one million euros that is being redrafted after being blocked by the constitutional court.

Growth has failed to reach the levels on which the government’s calculations were based and unemployment continues to rise.

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