French President Nicolas Sarkozy addresses a press conference during the second day of the G20 Summit on November 4, 2011 in Cannes, France.David Ramos/Getty Images
France's centre-right government on Monday unveiled extra budget savings worth €18.6-billion ($25.6-billion U.S.) over the next two years as it sought to convince financial markets that it would not succumb to the sovereign debt crisis threatening the euro zone.
The measures, a mix of tax increases and spending cuts, were aimed at ensuring President Nicolas Sarkozy's administration stays on target to reduce France's budget deficit to 3 per cent of gross domestic product in 2013, from 5.7 per cent this year, despite it being forced to reduce its forecast for growth next year to just 1 per cent of GDP.
François Fillon, prime minister, stressed that the measures would be worth €65-billion in savings over five years, enabling France to eliminate its deficit in 2016 and stick to its aim of reducing the public debt, due to peak at more than 87 per cent of GDP in 2012.
The government's big fear is that the fallout from the euro zone crisis will lead to a downgrade of its triple A sovereign debt rating.
"Our economic, financial and social sovereignty demand collective and prolonged efforts and also sacrifices," Mr. Fillon said. "Our country must never be condemned to following a policy imposed by others."