Homepage / Currency / French PM says time to end addiction to public spending
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Currency, United States Finance

French PM says time to end addiction to public spending

Prime Minister Edouard Philippe told lawmakers on Tuesday that it was time to end France’s addiction to public spending and rein in debts that he said were at an unacceptable level.

France’s new president, Emmanuel Macron, sees taming France’s spending and reducing its budget deficit was key to winning the trust of European Union partner Germany and persuading Berlin to embark on reforms of the bloc.

Last week France’s independent auditor revealed a more 8 billion euro funding shortfall in this year’s budget, forecasting a deficit once again above the European Union’s cap of 3 percent of national income.

“The French are hooked on public spending. Like all addictions it doesn’t solve any of the problems it is meant to ease. And like all addictions it requires willing and courage to detox,” Philippe told the National Assembly to applause.

Philippe said that for ever 100 euros Germany raised in taxes it spent 98 euros, while France spent 125 euros for every 117 euros levied in taxes.

“Who really believes this situation is sustainable?” Philippe said his objective was to haul the deficit below the EU’s cap this year and would target reducing public spending by three percent of national income over five years, while also reducing the government’s tax-take by one percent over the same period.

He said corporate tax would be gradually reduced to 25 percent from 33.3 percent now by 2022.

Macron’s upstart Republic on the Move (LREM) party has secured a comfortable majority in the National Assembly – and France’s youngest leader since Napoleon made clear his impatience to complete the reshaping of the political landscape that he has begun.

In his own speech to lawmakers from both chambers at the palace of Versailles on Monday, the former investment banker told France it was time to prepare for change. Philippe’s address gave the details to Macron’s lofty ambitions.

Source: cnbc
French PM says time to end addiction to public spending

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