French government announces £16bn cost-cutting plan

France’s Socialist government has detailed a 21 billion euro (£16.3 billion) cost-cutting plan, the biggest in the country’s modern history, saying it will focus on trimming welfare benefits.

Presenting the 2015 budget, finance minister Michel Sapin said the measures show the government is serious about reining in its budget deficit, which is above European Union limits.

“These spending cuts are crucial to our credibility in the eyes of the French and Europeans. They’ll be fully applied,” he said.

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Mr Sapin insisted, however, that they are not austerity measures as they will be accompanied by tax cuts as well.

The government hopes the reforms will assuage EU authorities irked by France’s decision to let its budget deficit reach 4.4 per cent of gross domestic product this year - far above the 3 per cent demanded by the EU.

A significant part of the savings is to be made in France’s generous welfare system. The government will cut social security spending by 9.5 billion euro (£7.4 billion), including 3.2 billion euro (£2.5 billion) from health spending, and 700 million euro (£545 million) from family benefits.

These measures prompted harsh criticism – especially among leftist voters – in a 
country that prizes its public services.

The government says it will reduce income taxes for six million families next year, for a total amount of 3.2 billion euro.