French PM demands €5 billion spending cuts

French PM demands €5 billion spending cuts
French PM Jean-Marc Ayrault (centre) mobbed by the press afte a recent speech in Paris. Photo: Lionel Bonaventure/AFP
French Prime Minister Jean-Marc Ayrault on Friday asked ministries to slash spending by €5 billion next year to help balance the budget amid low growth, spiralling unemployment and mass layoffs.

Paris recently acknowledged that its forecast for 0.8-percent growth this year was out of reach, meaning its budget planning to reach the European Union deficit ceiling of 3.0 percent of output was no longer sufficient.

"In the state budget, we must identify a total of five billion euros in savings in 2014," the prime minister said in a statement .

"These savings will help balance the public accounts while ensuring the financing of measures we have identified to buttress the competitiveness of our economy, fight unemployment and cushion those who are the worst hit," he said.

Ayrault said the savings should come through structural reforms in each ministry, adding that talks would take place between ministries and the finance and budget ministers in March and April before their 2014 budgets were fixed.

Budget Minister Jerome Cahuzac recently said France would have to find six billion euros in extra revenues next year.

This year French ministries have been informed how much to cut spending in order for the government to generate 2.0 billion euros ($2.6 billion) in savings.

President Francois Hollande has underscored the need for "economies in all budgets" of the state agencies to allow for a balanced budget in 2017.

Hollande has said that the government has so far put most of the effort to balance France's finances on increased taxes but that now the emphasis would have to switch to expenditure.

The European Commission has indicated that it may give France some slack in achieving deficit targets, and the IMF has recently warned EU countries that cutting deficits too fast was harming growth.

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