France expects a budget deficit of 8 per cent of GDP this year and has announced a raft of measures to bring it down to the EU’s 3 per cent limit by 2013.
The government also plans changes in the constitution to ensure future administrations adhere to fiscal prudence.
As Francois Baroin the French budget minister outlines:
“One thing this government is set on is to write down in the constitution that any new government must establish budget discipline for the whole of it’s mandate.”
The French plan to freeze all spending, except on pensions and interest payments and reduce state operating costs by 10 per cent.
Christine Lagarde, the French Economy Minister, said France would not follow in Germany’s footsteps to ban the naked short selling of sovereign debt, but backed Angela Merkel’s decision to set up measures to support the euro and the euro zone economy.