Wednesday, September 25, 2013

So Much For France's Leadership

Commentary by Roger Erickson

Don't step in the leadership. I've added some comments below, as [rge:].

France vows massive spending cuts for 2014

'France’s 2014 budget, announced on Wednesday, will involve “unprecedented” cuts in public spending, a move that has been criticized on the far-left for bringing “suffering to the people”, and on the right for being “anti-growth”.

France on Wednesday vowed "unprecedented" cuts in public spending for 2014 – worth 15 billion euros – as Europe’s second largest economy tries to rein in its
[fiat] deficit without compromising much-needed [real] growth.

[rge: Hmmm. Seems they really have a nominal credibility issue, right off the fiat.]

But critics on either side of the political spectrum remained sceptical that it would alleviate hardship in France, which is suffering from record-high unemployment, limited investment and low consumer spending.

Finance Minister Pierre Moscovici and Budget Minister Bernard Cazeneuve presented the draft budget to the cabinet, outlining 15 billion euros worth of cuts.

"We prefer to find savings rather than increasing taxes," the ministers said in their introduction to the draft budget.

Some 80 percent of these savings next year will come from cuts in public spending, which will particularly affect the defence, finance and environment ministries.

Only 20 percent of the savings will come from tax increases.'

[rge: Let me paraphrase that. 80% of the blood will be lost from the neck, and only 20% from the wrists ... but NO NEW FOOD OR FLUIDS? Werks fur mi!]

'Unprecedented in French post-war history
State spending, which will reach 57.1 percent of GDP this year, is expected to drop to 56.7 percent in 2014.

The two ministers said its level, excluding debt interest and pension payments, would fall in absolute terms by 1.5 billion euros from 2013 levels – a reduction they described as unprecedented in French post-war history.

Public debt, meanwhile, will reach a record 95.1 percent of GDP in 2014 – far higher than previous government estimates – before falling back again the following year.

The ministers reiterated a pledge that France's public deficit would gradually drop, meeting the 2015 EU-mandated deadline to bring it below three percent.

These decisions are all based on predictions of 0.9 percent economic growth next year and 0.1 percent in 2013, compared to zero growth in 2012.'

[rge: Holding their own Maginot noose themselves, at all costs? Go ahead, pledge that pigs will fly too. Pledge anything you want. Meanwhile, just step aside and get out of the way?]

‘Suffering of the people’
'But critics blasted the budget, saying it would not help French people already seriously battered by the ongoing financial crisis.

Jean-Luc Mélenchon, figurehead of the far-left, said the spending cuts just added to previous, huge cuts already implemented by the Socialist government since President François Hollande came to power last year.

"We must end this policy that continuously increases the suffering of the people and leads to economic, social and political disaster," he said in a statement.

Valérie Pécresse of the main opposition right-wing UMP and a former budget minister, said there were no real "savings" in the draft and that spending was being stabilised rather than decreased.

"This budget is an anti spending-power budget and therefore an anti-growth budget," she told France 2 television.

[rge: Ok, sounds like there's one sane logician left in the country. No promises though. Haven't seen HER platform. It might also infer taxes on flying pigs.]

The government, however, said it expected consumers' purchasing power to rebound, with growth of 0.3 percent this year and 0.8 percent in 2014 – compared to a drop of 0.9 percent in 2012.

Hollande said the draft budget – which still needs to be approved by parliament – encouraged "a return to growth and employment." '

[rge: Expected? Did they say expected? Since when did an expectorant promising feeble growth sound acceptable? And a return to whose growth & employment? Bankers? Are they saying that some people's g&e is more equal than others? Finally, they seem to be indicating that success = first 3 winning the race back to the animal farm. Really? The others are ... expendable? ?? Seriously? You call this a social species?]

See even more on this topic here.

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