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Major spending cuts in France

April 30, 2014

French lawmakers have narrowly approved 50 billion euros ($69 billion) in spending cuts designed to help meet deficit reduction targets. The plan is seen as the first major test for the country's new government.

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Frankreich Nationalversammlung Außenaufnahme
Image: picture-alliance/dpa

The 2015-17 "Stability Program" passed with 265 votes in favor to 232 against on Tuesday in the National Assembly, the lower house of parliament. The measure was viewed as a vote of confidence for France's new Prime Minister Manuel Valls.

Valls and President Francois Hollande have made the business-friendly measures to reduce payrolls and income taxes the centerpiece of their plan to lift France out of its economic doldrums.

Pushing for unity

The controversial strategy has drawn ire from the left wing of the country's ruling Socialist Party, which says the cuts are too steep and will hamper growth.

Valls worked hard to prevent a revolt in his party, with only 41 Socialist lawmakers abstaining, and welcomed the result of Tuesday's vote.

"It was essential … that there be a vote that showed that the majority, beyond all the debates, approved this project," he told parliament.

Valls, a former interior minister who was promoted at the end of March, has been frank about the budget cuts he believes are needed to restore France's economic prosperity.

"When you live beyond your means you can no longer face the future with prosperity," he told parliament before what he called the "decisive vote" that was a "moment of truth" for the country.

Targeting welfare benefits

The spending cuts will freeze a number of welfare benefits and the pay of most public sector workers. It will also fund 40 billion euros in cuts to employer payroll taxes, which Hollande hopes will promote job creation.

Valls proposed excluding benefits for the poor and pensioners earning less than 1,200 euros a month from the freeze. Additionally, the government included 5 billion euros in tax cuts for low-income households.

The main opposition Union for a Popular Movement (UMP) criticized the plan, saying it fell short of necessary structural reforms. "It's a real failure, a real fissure in the majority," said leader of the UMP deputies Christian Jacob.

Tuesday's vote was nonbinding and can now be submitted for approval to the European Commission.

dr/jm (dpa, AFP, Reuters)