France - Cuts Watch - Oct 2011

Authors: 
David Hall
Date published: 
Nov 2011

Download PDF version of this brief here: http://www.psiru.org/sites/default/files/France-cwbrief-Oct2011.pdf 

 Cuts Watch brief

Last updated: 23 November 2011

Author: David Hall

France

 In 2009 France introduced a stimulus package and rescued a number of banks by providing guarantees and funding worth over 16% of GDP.  The government deficit rose to 7.6%, but the recession was short and shallow in France, lasting only a year.

 Since the beginning of 2010 the government has introduced a series of ‘austerity’ measures,  with the aim of reducing the deficit to 3% by 2013. These include cuts in public spending and public services, as well as some tax increases.

 The largest measure has been cuts in the pension scheme, announced in June 2010. The minimum pension age has been raised from 60 to 62 – originally fixed for 2018, but brought forward to 2017 by the second emergency package of 2011. The age for receiving a full pension is being raised from 65 to 67. Public sector pension contributions have also been raised. Despite massive public opposition, led by the unions in a series of demonstrations and general strikes, the government continues to implement these changes.

 Other measures in 2010 included cuts in planned spending on healthcare - which by 2011 had already resulted in cuts of €3billionper year; a freeze in money terms on funding for local government; €7 billion from a 3 year pay freeze and job cuts for public employees; further cuts from a policy of only replacing one in every two retiring public servants  -  expected to cut public sector employment by 150,000 over five years. In addition there were €15 billion euros cut by not renewing stimulus measures and one-off tax breaks, and €10 billion saved by limiting tax exemptions.

 In August and November 2011 France introduced further ‘emergency’ packages. The August measures contained an extra €11billion cuts for 2012. The November measures include an additional €7billion cuts in 2012 and €11.6billion in 2013, including real cuts in some state benefits and public healthcare by cutting or ending the index-linking of amounts.