New austerity plan presented

A NEW raft of austerity measures is to be presented by the government today in a bid to save France’s AAA credit rating.

The hard-hitting plan is expected to include a speeding-up of the timetable for raising the state retirement age – with the age to reach 62 by 2016 or 2017 as opposed to 2018 as planned in the reforms voted in last year.

Another proposal is to stop indexing certain benefits – notably family allowance and possibly pensions – on inflation, but instead on economic growth.

The healthcare sector could also be targeted for cuts, mainly aimed at drug companies, Cpams (state healthcare insurance bodies) and certain medical professionals.

The government is also expected to aim to reduce expenditure by its ministries.

It is also expected to seek to raise VAT on restaurants and on home renovations from 5.5% to a new level of around 7-9% and to increase the rate of tax on savings that are taxed at source.

Prime Minister François Fillon will give a press conference today, before appearing on the 20.00 news on TF1 tonight.

He has said the measures will mean 2012’s budget will show levels of austerity not seen since 1945.

The aim is to create €6-8 billion in extra savings next year, due to the fact growth predictions for 2012 have been lowered from 1.75% to 1%.

Finance Minister François Baroin has said the suggestion of a second "Solidarity Day" will not be retained among the plans. Whit Monday was established as such a day when, in theory, workers work for nothing, their earnings going to help the elderly and disabled. It was brought in after there were nearly 15,000 deaths during a heatwave in 2003.