France Unveils Austerity Package, Cuts Growth Forecast


France has unveiled a package of austerity measures aimed at reducing the budget deficit by about $17 billion in two years.

Prime Minister Francois Fillon announced the measures Wednesday, saying they are dictated by the slower economic growth. The government revised its growth forecast for 2011 to 1.75 percent from 2 percent. Mr. Fillon said the European sovereign debt crisis has hurt the French economy.

Mr. Fillon said the austerity package would allow France to trim its public deficit to 4.5 percent by the end of next year.

The proposals include cutting government spending, closing some tax loopholes and raising taxes for the rich. The government proposes an additional 3-percent levy on annual incomes higher than $720,000.

Critics have said that the measures would erode public services and reduce purchasing power, and that the extra tax on the super rich was not sufficient.

Sixteen of France’s richest people published a letter saying they were willing to contribute toward the stabilization of the country’s finances, without specifying how much.

The letter’s signatories include France’s richest woman, L’Oreal heiress Liliane Bettencourt, and the chief executives of oil company Total and French dairy products maker Danone.

The letter echoes an appeal by U.S. billionaire investor Warren Buffett, who urged the U.S. government last week to collect more taxes from the country’s “super rich” as one way to cut the budget deficit and debt.

The French government had set a target of reducing its deficit from 7.1 percent of gross domestic product last year to 5.7 percent this year, and then to 4.6 percent next year. But a recent slowdown in French economic growth is making it harder to meet those goals because slower growth leads to lower tax revenues.


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