It is France’s turn to feel the cold wind of austerity following the publication of the Socialists’ first budget.
It aims to raise 30 billion euros from higher taxes and savings in public spending to get the budget deficit down to three percent of GDP by the end of next year.
There will be higher taxes on the rich, but none of the structural reforms forced upon the Greek, Portuguese or Spanish governments.
“In this Europe whose orientation is changing, France has a particular role to play… and what we’re doing today with the budget is a major policy move, an act of confidence, an act of mobilisation,” said Prime Minister Jean-Marc Ayrault.
France has not had a budget surplus since 1974, and is taking this step to shore up market confidence in its economy and bolster the euro. But with no growth and climbing unemployment, is it the right time to hit the brakes?
“This is a budget that will cause a recession in our country. Taxes will hit companies and then they will not invest more and create more jobs. They will hit households and then they will consume less so that will not create more jobs,” said the opposition UMP’s former budget minister Valerie Precresse.
Unemployment in September hit a 13-year high, with a rising number of long-term and young unemployed. The French have never been slow to take to the streets to protest; how long will it be before they challenge the government?