Tags: France | Sarkozy | Spending | Cuts

France's Sarkozy Vows to Make $52 Billion in Spending Cuts

Thursday, 05 Apr 2012 01:49 PM

 

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Nicolas Sarkozy, fighting for a far-from-assured second term as French president, promised Thursday to slash public spending and increase taxes to set his indebted country on a more balanced path.

His critics on the left said his pledges would unfairly hurt the poor and that he's in part to blame for the high deficit and debt he's now trying to cut. And it's unclear whether Sarkozy's promises would be enough to reassure investors who worry that France's economic model is unsustainable.

Sarkozy, a conservative, said balancing the budget by 2016 is "an absolute imperative," and promised a balanced budget law this summer.

He said he would do that by cutting 40 billion euros ($52 billion) in public spending and raising 13.5 billion euros ($17.6 billion) in new taxes.

But first he has to win a second term in elections April 22 and May 6.

Polls suggest the divisive president would be neck and neck with Socialist Francois Hollande in the first round, but that Hollande would win convincingly in the decisive runoff.

Sarkozy's campaign promises so far add up to 9 billion euros ($11.7 billion), according to a campaign manifesto released Thursday.

Sarkozy came to office in 2007, pledging to slash France's costly social protections to make the economy more globally competitive. His momentum stalled amid the world financial crisis and ensuing European debt crisis, and now, with just 17 days left before the elections begin, he's trying to revive it.

"We can no longer put off the choice of evolution of the nation," he said Thursday.

But his new pledges take into account public frustration with banks, high executive pay, and market players blamed for exacerbating France's financial problems.

Extra government income will come from ending tax breaks and loopholes, raising taxes on dividends, a special minimum tax on big companies — and a special tax on people who flee France to avoid high taxes.

"We have to liberate the economy from the tyranny of the short-term and speculative finance," Sarkozy said.

He criticized Hollande's campaign pledges as a "festival of new spending" and warned that would dig France deeper in the economic hole.

Sarkozy issued a 30-page letter to voters with 32 propositions "for a Strong France," his campaign slogan.

The slogan and the letter stress security, an area where Sarkozy is seen as strong. During this campaign, however, unemployment and purchasing power are voters' much bigger concerns, and many voters feel Sarkozy's first term has been too friendly to the rich and too hard on the poor and middle class.

France saw its borrowing costs rise slightly on Thursday when it sold 8.44 billion euros ($11 billion) in a long-term bond auction.

Concerns about France's economy became more acute when Standard & Poor's stripped it of its AAA-rating earlier this year. The impact of the downgrade, which was largely expected, has been limited. But a poor Spanish debt auction on Wednesday renewed worries that European economies aren't growing fast enough to keep their deficits in check.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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