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France sees toughest cuts to spending since 1945

John Lichfield
Sunday 06 November 2011 20:00 EST
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President Nicolas Sarkozy will be forced to swallow his own medicine today, imposing new austerity measures a week after insisting on harsh discipline for Greece and Italy.

A French cabinet meeting is expected to announce increased taxes and new spending cuts amounting to €6bn (£5.1bn) to €8bn (£6.8bn) in an attempt to keep the 2012 state budget within annual deficit limits already promised to Brussels and financial markets.

At the weekend, Prime Minister, François Fillon, said the squeeze on public finances next year would be "amongst the most rigorous since 1945". The fall in projected growth next year to 1 per cent has obliged Mr Sarkozy to impose the measures in an attempt to persuade rating agencies that public spending is under control. The Moody's agency announced last month that it would review France's "stable" outlook for its triple-A debt rating over the next three months. The austerity package is expected to include a new VAT band of 7 per cent on some activities now in the lowest tax band of 5.5 per cent.

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