France cuts growth forecasts and will tax the rich

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France cuts growth forecasts and will tax the rich

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The French government has cut it forecast for economic growth and unveiled plans aimed at ensuring that slowdown does not undermine its AAA credit rating.

The cabinet agreed to raise twelve billion euros in extra revenues this year and next.

Facing an tough reelection battle next April, President Nicolas Sarkozy steered clear of spending cuts but will put up taxes on the rich, as well as cigarettes and alcohol and reduce tax breaks.

Finance Minister François Baroin said: “The president has reconfirmed the French government’s absolute determination to meet our deficit objectives.”

His boss – Prime Minister Francois Fillon – said that “is in the interest of all the French people.”

The moves come after a stock market meltdown demonstrated concern over French public finances.

Paris has cut its outlook for GDP growth for 2012 from 2.25 percent to 1.75 percent

It also trimmed its growth forecast for this year to 1.75 percent from the previous estimate of 2.0 percent.