Dominique de Villepin, France’s prime minister, on Tuesday promised more policemen and fewer teachers as part of a plan to improve the country’s public finances by cutting 15,000 public sector jobs.
The 2007 budget, presented to parliament on Tuesday, aims to reduce the country’s swollen debt by restricting public spending to an increase of 0.8 per cent, or a cut of 1 per cent in real terms below forecast inflation of 1.8 per cent.
The cut in the number of public servants is part of the government’s recently discovered taste for fiscal frugality. It aims to cut the country’s budget deficit from 2.8 per cent of gross domestic product this year to zero and to reduce the debt to below 60 per cent of GDP by 2010.
The plans won praise from Joaquín Almunia, Europe’s monetary affairs commissioner, who said: “Fiscal consolidation that was launched in 2005 and 2006 could be sustainable in 2007. In that case France will be one of the coun- tries that…will no longer have an excessive deficit.”
Economists said the planned headcount reduction was relatively modest, compared with the 80,000 civil servants expected to retire next year. There was also some scepticism over whether the plans, expected to save €500m to €600m would be put into action.
Mr de Villepin’s government has already found headcount reductions difficult. It promised to cut 10,000 civil service jobs this year but has now admitted this will be only 5,500.
However, the budget was attacked by the opposition Socialists, who criticised the government for cutting jobs in schools while proposing a €3.6bn ($4.5bn, £2.5bn) tax break to the middle classes which will come into effect just a few weeks before next May’s presidential ballot.
Francois Hollande, Socialist party leader, told Le Monde: “Rather than cutting the number of civil servants in a purely ideological way, the government would be better off abandoning its planned income tax reduction in 2007.”
The unusual move of cutting spending during an election year is part of Mr de Villepin’s strategy to make the dire state of France’s finances one of the main issues of the campaign ahead of next May’s presidential elections.
Mr de Villepin’s centre-right government hopes its new-found taste for frugality will help it to undermine the generous spending promises already being trumpeted by the opposition Socialist party in its election manifesto.
France’s debt has grown five-fold in the past 25 years, reaching €1,138bn last year. The biggest area of spending is the public sector, which employed 5.21m people at the end of 2003.
Jean-Francois Cop, budget minister, on Tuesday accused the Socialist party of “permanent double talk” on public finances.
He said the Socialists were promising to increase public spending by between €50bn and €100bn without specifying how this would be funded.
“What we want to know is how would the Socialist party fund their spending promises? By raising taxes or increasing debt?” Mr Cop asked.
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