French Prime Minister Edouard Philippe on Tuesday unveiled an ambitious program of tax cuts and reduced public spending designed to boost investment and end the nation’s reliance on state borrowing.
Philippe put spurring entrepreneurship at the heart of his first policy speech to the French National Assembly after presidential and parliamentary elections in May and last month.
The government sailed through a vote of confidence held afterward, with 370 lawmakers in the lower house backing it and 67 opposed. There were 129 abstentions.
“Businesses must want to set up and develop on our territory rather than elsewhere,” Philippe told the lawmakers, announcing that corporate tax would be cut from 33 percent to 25 percent in the next five years.
Tackling France’s “addiction to public spending” was a priority, he said, warning that public debt totaled 2.1 trillion euros (US$2.3 trillion), nearly the equivalent of an entire year’s economic output.
“We are dancing on a volcano that is rumbling ever louder,” Philippe told the newly elected lower house.
He announced plans to cut public spending — 56 percent of GDP, one of the EU’s highest levels — by 3 percentage points and bring the budget deficit in line with an EU limit of 3 percent of GDP this year for the first time in a decade.
However, he did not detail the 4 billion euros in cuts needed to meet the deficit target, but said some planned tax cuts would be postponed.
The leader of left-wing France Unbowed, Jean-Luc Melenchon, accused French President Emmanuel Macron of pushing a liberal EU-backed line that “is sinking France and strangling Greece.”
“We did not elect Mrs Merkel,” Melenchon told the assembly, referring to austerity advocate German Chancellor Angela Merkel.
Almost all of the measures laid out on Tuesday confirmed election promises made by the 39-year-old centrist president, who was elected France’s youngest-ever president in May after promising to modernize the nation.
The government has already set out one of his boldest reforms — an overhaul of France’s rigid labor laws, which will give companies more powers to negotiate conditions directly with their employees, skirting industrywide deals.
The reforms, which Macron wants to fast-track through parliament using decrees, face stiff resistance from left-wing opponents.
The powerful CGT trade union, which spearheaded weeks of sometimes violent labor protests last year, has already called for protests and strikes in September.
The government is likely to face little difficulty in passing legislation in the lower house of parliament, where Macron’s new Republic on the Move party won more than 300 out of 577 seats in last month’s election. The upper-house Senate, where right-wing Republicans hold a majority, is likely to be trickier.
Philippe said that the government would also honor other campaign pledges, including introducing a new national service for young people, making dental and eye care free on the health service, and creating 15,000 new spaces in France’s overcrowded jails.
Other measures include raising the price of cigarettes progressively from 7 euros to 10 euros to fight smoking-related diseases, the leading cause of preventable deaths in France.
Philippe’s announcements came a day after Macron convened a rare sitting of both houses of parliament in Versailles for a novel US-style “state of the nation” address in which he pledged to restore France’s “conquering spirit.”
Macron pledged “deep transformations” of France’s entrenched political system and economy.
He said he would slash by a third the number of lawmakers, telling the about 900 National Assembly and Senate members present he would call a referendum if they did not agree to the measure.
Since taking office Macron has held court twice at the former royal palace in Versailles — he hosted Russian President Vladimir Putin there for talks in May — and has given only one media interview, drawing accusations of being aloof, monarchical or even “pharaonic.”
However, he still enjoys positive approval ratings, with slightly more than half of respondents in polls expressing a positive view of him.
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