The French Government announced an austerity plan that would involve €45bn in spending cuts over the next three years (€11bn per year which corresponds to 0.55% of GDP per year). Prime Minister Francois Fillon said the cuts were aimed at bringing France's public deficit back down to the European Union's limit of three percent of gross domestic product by 2013.
General information and figures
The French Government announced an austerity plan that would involve €45bn in spending cuts over the next three years (€11bn per year which corresponds to 0.55% of GDP per year). Prime Minister Francois Fillon said the cuts were aimed at bringing France's public deficit back down to the European Union's limit of three percent of gross domestic product by 2013.
Unemployment rate (June 2010): 9.9%
GDP (bn euro – 2010): 1946.56
General Government Debt (2009 - % GDP): 78.1
Public deficit (2009 - % GDP): 7.5
Source: Eurostat
Public Employees
31,000 job cuts in 2011 (only 1 person out of every 2 is being replaced).
Non-indexation of pay of civil servants (savings of €0.8bn per year).
{{Cuts in social benefits
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Social Security costs will increase only by 1.2% per year, which means a reduction of 4% taking into account the trend. The government decided to reduce €1.5bn per year in health reimbursements and a reduction of €1bn in costs related to unemployment benefit and the “Revenu de solidarité active (RSA)”.
Pension reforms
Pension age increased from 60 to 62.
The pension reform is expected to reduce the total expenditures for pensions by €1.5 bn per annum.
Cuts in public services, transfers and public investments
Cuts of 3% per year in administrative costs (save: €0.3bn per year).
Cuts of 4% per year in the State intervention costs.
Cuts of €3bn per year in transfers to local authorities.
Tax changes
On the tax side, the measures announced will yield €35bn (1.75% GDP).
Taxation on households will raise €3.5bn, while corporate tax is expected to raise €7.5bn (which corresponds to the end of the incentive measures adopted during the crisis).
Indirect tax changes will raise €3.1bn and tax on banks €0.5bn.
Companies‘ and households’ social contributions are respectively expected to raise €3.4bn and €2.1bn.
It has not been explained where the remaining amount of €14.2bn will come from.