French Prime Minister Francois Fillon yesterday announced plans to save 100 billion euros (US$137.09 billion) to eliminate the nation’s budget deficit by 2016, including 500 million euros in extra state budget savings next year.
“The time has come to adjust France’s efforts. With the president [Nicolas Sarkozy], we have only one goal: to protect the French people from the serious difficulties that many European countries are now facing,” Fillon said during a press conference.
“I believe that our citizens are now aware of the risks to our livelihoods and futures caused by deficits and debt. Bankruptcy is no longer an abstract term. Our financial, economic and social sovereignty require prolonged collective efforts and even some sacrifices,” he said.
Photo: AFP
Fillon announced a series of budget cuts and tax hikes aimed at keeping France’s finances on track and preserving its critically important triple-A credit rating.
“To reach zero deficit by 2016, which is our objective, we must save a little more than 100 billion euros,” he said. “It is unthinkable to do this exclusively by raising taxes, as the opposition suggests. This would lead to the tripling of income taxes and the doubling of VAT [value-added tax].”
The government’s flagship reform of raising the retirement age from 60 to 62 will be brought forward from 2018 to 2017, Fillon said.
The VAT on many goods and services will be raised from 5.5 percent to 7 percent, except on essential goods such as food.
Corporate taxes will also be temporarily raised by 5 percent on corporations with annual turnovers of more than 250 million euros, he said.
“Our country must not be condemned to have its policies one day imposed by others. I want to tell the French people that the budgetary and fiscal efforts that we undertake today are a choice we make for the country and for generations to come,” Fillon said.
The new measures are on top of August’s 12 billion euro deficit-cutting package that raised taxes on the rich and closed tax loopholes and after France revised its growth forecast for next year from 1.75 to 1 percent.
Sarkozy had spent the weekend huddled with top ministers and advisers to devise the plan, amid rumors that France might be stripped of its triple-A rating.
Ratings agency Moody’s warned last month that it may place a negative outlook on France’s “Aaa” credit rating within three months as the government’s financial strength had “weakened.”
The new measures also come as center-right Sarkozy seeks to shore up his economic credentials six months ahead of a presidential election.
Sarkozy is lagging in the polls behind Socialist challenger Francois Hollande, who has been mounting a strong challenge from the left.
Fillon also said that the salaries of Sarkozy and his ministers would be frozen as part of austerity measures, calling on business leaders to do the same.
“The salaries of members of the government and the president will be frozen until a return to a strict balancing of public finances,” Fillon said. “I call on political leaders and heads of big companies, particularly businesses in the CAC 40, to do exactly the same thing,” Fillon said, referring to the Paris stock exchange’s blue chip share index.
“I call on everyone to show great responsibility,” Fillon said, calling pay rises for some bosses “frankly indecent.”
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure