Crisis meeting as spending cuts loom

Sarkozy calls ministers back from their holidays to prepare new austerity measures aimed at slashing budget deficit

10 August 2011

FRENCH ministers have been given a week to come up with a new range of cost-cutting measures aimed at slashing the country's budget deficit and reassuring the nervous stock markets.

President Sarkozy called ministers back from their holidays for an emergency meeting in the Elysée yesterday, where they discussed France's response to the global financial crisis.

Share prices have plummeted this week because of concern that France might follow the United States and lose its prestigious triple-A credit rating. Société Générale bank lost more than a fifth of its market value at one point as rumours spread about its financial stability.

Sarkozy has asked finance minister François Baroin and budget minister Valérie Pécresse to present their money-saving proposals to him by August 17, when he will meet prime minister François Fillon to discuss what moves to take.

The proposals are likely to include more tax reforms, including the scrapping of a number of tax breaks (niches fiscales).

The president is eager to cut France's budget deficit from 7% of its GDP to 3% in 2013 and ensure the country is not downgraded by the credit rating agencies.

A final decision on the scale of the new spending cuts, which will be included in the 2012 budget law, will be taken at the first cabinet meeting of the rentrée on August 24.

Stock photo: Dan Race - Fotolia.com

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