Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

READ ALSO: France and Germany push for compromise on eurozone reform

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French budget 2019: Government unveils major tax cuts as growth flags

The French government on Monday unveiled billions of euros in tax relief for businesses alongside further budget cuts, as President Emmanuel Macron struggles to deliver more jobs and higher growth as promised.

French budget 2019: Government unveils major tax cuts as growth flags
Economy minister Bruno Le Maire and Budget Minster Gerald Darmanin.

The former investment banker's poll ratings have dived in recent weeks as growth has slowed despite a series of reforms presented as unavoidable shock treatment for getting France on solid financial footing.

Critics say most people have been left behind by Macron's policies so far, which have seen him raise taxes on retirees while cutting a wealth tax on top earners.

Pensions and welfare benefits will be shaved further in the 2019 budget — Macron complained in June that France spends “a crazy amount of dough” on social programmes.

And 4,100 more public sector jobs will be axed as Macron aims for a deficit of 2.8 percent of GDP, below the 3 percent limit set for EU members.

Higher taxes on fuel and cigarettes will also hit consumers next year.

But the government says the pillar of the 2019 budget will be a combined 20 billion euros ($23.5 billion) of tax cuts for businesses and six billion euros in tax relief for households, including a gradual end to an annual housing tax.

“The long-term goal is to build a new French prosperity that will benefit all French people in all regions,” Finance Minister Bruno Le Maire said as he presented the budget in Paris.

But he acknowledged that results from Macron's reform drive so far “are unsatisfactory compared with our European neighbours, and we certainly don't intend to stop here”.

“We're doing less well than our European partners on unemployment, growth, the deficit and debt,” Le Maire said.

Ratings sink

Patience is wearing thin for many as unemployment has barely budged since Macron's election in May 2017, standing at 9.1 percent.

The 40-year-old centrist captured the presidency with a pledge to shake up an economy he says is held back by excessive regulations and rigid labour laws.

But growth has been slowing and is now widely expected to reach just 1.6 percent this year, and the government is forecasting an uptick to just 1.7 percent next year.

A poll released Sunday found just 29 percent satisfied with Macron's leadership, while a separate survey last week said only 19 percent of French people held a positive view of his record.

He has promised to balance the budget in France for the first time in more than 40 years by the end of his term in 2022 — a task that will require an overhaul of state spending.

That has led him to take on France's powerful labour unions to a degree not seen in decades, overcoming stiff resistance to new laws making it easier to fire people and ending the privileged status of rail workers.

He has also promised to cut 120,000 public sector jobs by the end of his term in 2022, a daunting prospect in a country known for its expansive bureaucracy which guarantees civil servants jobs for life.

Yet Macron has appeared to be dismissive of the concerns of everyday voters, most recently telling an unemployed gardener to go get a job in a restaurant or construction instead.

His reformist zeal has also exposed him to criticism that his policies favour businesses in particular, and he has struggled to shake off perceptions that he is “president of the rich”.

The vow to cut social spending is unlikely to reassure the lowest earners in France, where the number of people living below the poverty line has swelled to 14 percent of the population, according to national statistics office INSEE.