The French government should use a third of the 50 billion euros ($68.20 billion) in budget savings planned over the next three years to finance tax cuts for households, Economy Minister Arnaud Montebourg said on Thursday, reports Reuters.
In a speech laying out his ideas for reviving the French economy, the minister also hit out at the European Union's austerity policies and said the European Central Bank should do more to help growth and weaken the euro.
He said that another third of the savings should be used to reduce the public deficit and the final third to finance tax breaks planned for companies to help their competitiveness.
The budget savings are the cornerstone of President Francois Hollande's plans to get the strained public finances in order and bring them in line with EU rules.
France has committed to cutting its public deficit to the EU limit of 3 percent of gross domestic product next year from 3.8 percent this year. The goal is looking overly optimistic as the economy struggles to gain momentum.
Montebourg, an outspoken critic of austerity, said he did not want to put the savings drive into question, but the funds had to be used to boost flagging growth.
"It's undeniable that these savings will cause a recession in France and Europe if they are not offset by an equivalent monetary and budgetary injection into the euro zone economy," he said. "Or if they are not broadly given back to companies and households in the form of tax cuts."
The government hopes 40 billion euros in corporate tax breaks planned for the next three years will speed up the recovery of the euro zone's second-biggest economy. But acceleration is proving elusive. The economy is struggling after it stalled in the first three months of the year.
Read more of this report from Reuters.