PARIS: The French government said tax cuts and extra spending on defense, security and youth employment won’t swell the deficit in President François Hollande’s last budget before presidential elections.
French Finance Minister Michel Sapin said on Tuesday that the 2017 budget would bring the deficit down to 2.7% of economic output in 2017 from a forecast 3.3% for this year, despite €9 billion ($10 billion) in extra spending announced in the spring by Mr. Hollande.
The Socialist government’s optimism about France’s economy and finances ahead of the 2017 elections has drawn criticism from conservative opposition leaders. Contenders in center-right primaries have forecast the budget deficit will grow next year after Mr. Hollande’s promises to finance training schemes for young people and increase security and military spending after a spate of terror attacks in France.
Mr. Sapin said Tuesday that the extra spending will be financed by cuts to the budget of the social security administration, lower-than-expected debt costs, slower growth in local authority spending, and advancing the payment of some taxes by the country’s largest companies. Overall, France’s tax burden will remain at 44.5% of GDP in 2017 as the government hands tax breaks to lower income households and small companies.
In the presentation of the budget Tuesday, Mr. Sapin brushed aside the concerns of opposition leaders. Instead, he said the proposals of some candidates in the primaries to slash taxes next year to spur growth would derail France’s public finances.
“The credibility of France’s word is at stake,” Mr. Sapin said. ““It would be dramatic if our efforts were wiped out with a few months of irresponsibility.”
