France to face new austerity drive after audit shows state overspend

The French government is to freeze public-sector pay and take other "difficult decisions" as part of an austerity drive to reach its EU public deficit target, ministers announced after a specially commissioned audit of public spending called for "unprecedented" cuts in public spending.

French Budget Minister Gérald Darmanin (L) and Economy Minister Bruno Le Maire RFI/ Pierre René-Worms

Budget Minister Gérald Darmanin announced the pay freeze on Thursday following the publication of the audit, which called for the whole public sector to make extra savings.

Unions slammed the proposal, claiming that public employees had suffered enough from austerity and claiming that the Court of Audit, which produced the report, "has no more credibility".

The pay freeze would take effect in 2018, a rise of 0.6 percent in 2017 having already been decided by the outgoing government, following a 0.6 percent in 2016.

Darmanin estimated that cuts of four to five billion euros will have to be made to reach the EU's target of a public deficit of 3.0 percent of GDP for 2017 without raising taxes, as the government has pledged to do.

Previous government blamed

The audit, which the government commissioned in the interests of "transparency" and "good governance", blamed the previous government of president François Hollande's for effectively cooking the books towards the end of its term.

At 3.2 percent of GDP, spending will be eight billion euros more than predicted, it found, "almost exclusively because of an underestimate of state spending".

The government was aware of the problem in autumn 2016 "and more precisely last April" when it promised to reduce the deficit to 2.8 percent this year and 2.3 percent in 2016, the report claimed.

Former finance minister Michel Sapin and budget minister Christian Eckert denied the accusation in a statement.

No tax rises

Prime Minister Edouard Philippe called the situation "unacceptable" but said France would meet its budget commitment this year.

"We won't do it by raising taxes, we will do it by making savings," he said.

In the wake of the terror attacks of 2015 and 2016, the Hollande administration committed the country to extra spending on defence and security in 2018 as well as a number of infrastructure projects.

Economy Minister Bruno Le Maire said that "difficult decisions" would have to be made but that President Emmanuel Macron campaign promises would be kept.

Macron's programme pledged to replace wealth tax with a tax on revenues from real estate, reduce employers social security contributions and slash 50,000 public-sector jobs in his election campaign.

Government spokesman Christophe Castaner described France as a country "addicted to public spending" following the report's publication, adding "now we have to live up to our responsibilities".

The leader of the mainstream right's parliamentary group, Christian Jacob, on Friday mocked Philippe "fake anger", pointing out that the president was economy minister for a time in the previous government, although it was Sapin who was in charge of the budget.