France has unveiled a multibillion euro cost cutting plan to be executed over two years in order to press down its deficit below the European Union’s cap.
The Finance Ministry revealed on Wednesday that the country would be shaving €9 billion (USD 9.60 billion) off costs through the plan.
Accordingly, some €4 billion (USD 4.26 billion) will be trimmed from the budget this year, including through €1 billion (USD 1.06 billion) worth of cuts from social security and health spending. The government also expects to save €1.2 billion (USD 1.28 billion) in 2015 thanks to lower servicing costs on public debt.
It is planning another €5 billion (USD 5.33 billion) in savings next year.
In its so-called “stability program” that each eurozone country must send to Brussels, France confirmed its budget deficit would be below the limit of three percent of gross domestic product (GDP) in 2017. The budget deficit will stand at 2.7 percent of GDP in 2017, just below the EU bar of 3.0 percent.
However, Paris ventured to enrage the EU by saying that to maintain economic growth, it will target smaller reductions in its structural budget deficit in 2016 and 2017 than called for by the bloc’s executive branch, the European Commission.
“Implementing those (EU) recommendations would have stifled growth and stopped us from curbing unemployment,” said French Finance Minister Michel Sapin, who added, “Our strategy is built around our determination to get the economy back up and running in the long term … to boost growth and jobs.”
The European Commission has said France must cut its structural deficit by 0.5 percent in 2015, 0.8 percent in 2016, and 0.9 percent in 2017. The country has said it would reduce its structural deficit by 0.5 percent per year until 2017.
The eurozone’s second-largest economy expanded at a sluggish rate of 0.4 percent in 2014 as the government battled stubbornly against high unemployment. Most economists believe that France needs a growth rate of around 1.5 percent to create jobs.
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