Concern over costs for Macron plans

The sale of diesel and petrol cars is set to cease by 2040 when electric charging points will be common

Budget cuts are raising problems for new president Emmanuel Macron as he seeks to initiate tax cuts, increase investment, and reduce France’s deficit to EU-approved levels

To live up to his election promises President Emmanuel Macron must cut taxes, raise public spending and reduce the budget deficit to 3% of GDP – a task his critics claim is impossible.

His plans for €60billion of investment across a raft of schemes, matched by other spending and tax cuts have already hit their first obstacle, an €8bn hole discovered by an initial audit of government accounts.

The demand for immediate budget cuts in government departments (-€268m at the Economy and Finance Ministry, -€160m Justice Ministry, -€526m Interior Ministry among them) was overshadowed by the resignation of the head of the armed forces after the Ministry of Defence was ordered to make €850m cuts.

To further complicate the budget squeeze, Macron’s plan to scrap the CICE, François Hollande’s income tax credit for businesses that take on staff (already scheduled to rise in 2017), and replace it with a lower rate of business charges, would see the government paying twice in one year, for the credit and for the charge reduction. 

Such a move would force France, already the last eurozone nation still running a deficit above the 3% deficit target, to miss it for another year, however, commentators say the EU may be able to make a one-off exception for this particular policy.

While Mr Macron and his party claim the cost ...

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