Wednesday, August 24, 2011

France to introduce austerity measures

French President Nikolas Sarkozy, left and French Prime Minister Francois Fillon ,right

Source: Press TV

France is due to announce tighter fiscal measures, clamping down on tax breaks, as it seeks to restrain its deficit, amid concerns that the country could lose its AAA credit rating.

French president, Nikolas Sarkozy ordered the budget and finance minister to pull together the measures earlier this month, after French stock were hit heavily over the stability of country's triple A credit rating, Reuters reported.

Prime Minister Francois Fillon, will outline plans to scrap tax exemptions and incentives that could save as much as 10 EUR billion in extra revenues in the 2012 budget.

France's fast deteriorating economic growth outlook means that the government must squeeze EUR 10 billion from 2012 budget.

The measures could target corporate tax credits and exemptions from welfare contributions on overtime, also French high earners are likely to see a largely symbolic increase in tax.

The government had based its deficit targets on expectations the economy would grow 2.0 percent this year and 2.25 percent in 2012.

However Many analysts now expect significantly weaker growth after a stagnant second quarter.

Eurozone countries have spent much of the past 18 months trying to battle their debt crisis.

Europe's spreading debt crisis threatened to draw in France earlier this month after by putting the country's AAA credit rating at risk.

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