France's government is to freeze welfare payments temporarily and sustain a freeze in civil servants’ pay as part of its commitment to cut public spending by €50bn over the next three years, reports The Financial Times.
Spelling out details of the cuts for the first time, Manuel Valls, the new prime minister, said on Wednesday: “I owe the French people the truth. We cannot live beyond our means. And we must break the train of debt that, progressively and stealthily, is tying our hands.”
The pay and welfare freezes are set to be the most controversial elements in the savings package that President François Hollande promised earlier this year alongside a “responsibility pact” with business to reduce taxes in a bid to boost growth and employment.
The €50bn of cuts, to be implemented between 2015 and 2017, follows €15bn planned this year. But the unprecedented savings, amounting in total to some 3 per cent of gross domestic product, are widely forecast to be insufficient for France to meet its EU-designated target of bringing the budget deficit below 3 per cent of GDP next year.
Mr Valls repeated the Socialist government’s commitment to hit the target, already twice delayed by Brussels, despite earlier indications by Mr Hollande and other ministers that they would seek more leeway.
Promises of further tax cuts for the low paid have added to concerns that the savings programme will fall short of meeting the deficit target. But Mr Valls gave no indication of going beyond the €50bn pledged that has already caused unrest in Socialist ranks.
Read more of this report from The Financial Times.