STOCK MARKET WATCH -- Monday, 2 July 2012

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44. France 'facing austerity measures'

http://www.irishtimes.com/newspaper/breaking/2012/0702/breaking29.html

France's new Socialist government must cut public sector jobs and force through eye-watering austerity measures next year to meet a key European deficit target, the national audit office said today in an in-depth report on public finances.

Economists have warned for months that faltering economic growth was gnawing a hole in state revenue, but president Francois Hollande kept the issue largely under wraps until he won presidential and parliamentary elections in May and June.

Having promised to steer clear of Greek-style austerity to rally voters, Mr Hollande risks angering the public, leftist allies and trade unions as he seeks what the audit office said should be €33 billion in savings next year.

That is equivalent to 3.3 per cent of government spending."2013 is a crucial year. The budgetary equation is going to be very hard, much harder than expected due to the worsening of the economic picture," Didier Migaud, head of the Court of Auditors, told a news conference. "It will require unprecedented cuts to public spending as well as increases in taxation."