ORIGINAL FRENCH ARTICLE: Fillon met la France au régime sec
by Medhi Fikri
Translated Monday 19 July 2010, by Bill Scobleand reviewed by
On June 12, the French Prime Minister announced a 45-billion-euro cut in government spending by 2013. He also intends to end retirement at age 60.
On Saturday, June 12, at a meeting with new members of the governing UMP party at the Gaveau hall in Paris, French Prime Minister François Fillon killed two birds with one stone, announcing both budgetary austerity measures and his intention to attack the iconic legal retirement age.
On the first point, the prime minister was perfectly clear: Since France is expecting a historic deficit this year, amounting to 8% of its gross domestic product, the government will tighten its belt. In early May, the prime minister had announced a series of measures aimed at reducing the deficit, but no figures were communicated at the time. On Saturday, June 12, he spoke of a reduction of 45 billion euros in government spending over the next three years. “We have made a commitment to bring our deficit down to 3% [of GDP] by 2013, and all our efforts will focus on that priority. In sum, that means reducing the deficit by 100 billion euros by 2013,” he declared.
100 billion euros by 2013.
Half of the 100 billion euros is to be achieved through reductions in government spending and the other half by increasing government income. According to François Fillon, the 50 billion euros in cuts break down as follows: “5 billion euros in reductions in tax breaks” and “45 billion euros by reducing government spending.” In other words, clear-cutting of government finances.
Things are less clear when it comes to increasing income, with the prime minister betting on a hypothetical return of growth, which would produce “35 billion euros, making up the shortfall in income” due to the economic crisis. And the other 15 billion euros “correspond to the end of the measures that we have taken to relaunch the economy and which naturally are not intended to outlast this relaunch period.”
The second piece of bad news is rather a confirmation on the question of retirement. On Saturday June 12, François Fillon stole a march on Eric Woerth. The Minister of Labor will present the government’s retirement reform proposals on June 16. According to a government source, there will be “arbitration up to the last minute and even after the labor minister’s announcement.” This did not prevent the prime minister from making his articles of faith known as concerns the legal retirement age of 60.
“The truth is implacably linked to the demographic challenges which we must meet and this challenge demands working longer and hence increasing the dues-paying period and the age at which retirement benefits can be claimed,” the prime minister thundered before the new UMP members. According to the prime minister, “it would be cowardly on our part to tell the French that their retirement can be guaranteed without lengthening the working period and without changing the legal retirement age and the iconic figure of age 60.”
Confronted with the need to finance the retirement system, estimated at between 56 and 80 billion euros in 2030, Fillon moreover spoke of “soliciting new sources of financing because the effort has to be shared by all.” The new forms of financing remain unknown because, while the government is examining other options, such as an increase in dues-paying by government workers and drawing on the retirement reserve fund, it has on the other hand abandoned, according to the June 12 issue of Le Figaro newspaper, the idea of a temporary tax on incomes of over 11,000 euros a month.