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France to cut spending by $2 billion

Staff writer |
France will cut spending by $2 billion for the first time in more than 55 years and spending will decrease every year.

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Prime Minister Jean-Marc Ayrault confirmed that the French Government will decrease spending year on year. However, the government is facing opposition who claim the deficit will be higher than expected this year.

"This is the first time that we will propose to Parliament such a reduction. It is a structural effort," Mr. said Ayrualt.

The government will cut spending in 2014 by $2 billion to avoid unpopular tax rises: 750 million euro will be cut from central government support and 750 million euro will be cut from ministry budgets. Mr. Ayuralt said the government's priorities would remain unchanged: job creation, education, and housing.

Gilles Carrez, an opposition's politician who heads the finance commission at the national Assembly, said to Le Figaro that the government would miss its targets and that deficit in France could reach 4 percent in 2013.

France President Francois Hollande and the Socialist government revised their predictions and updated their deficit forecast to 3.7 percent of GDP and called Parliament to cut deficit to 3 percent this year. To reach its budget deficit goal, France should cut the public deficit to 3.9 percent of GDP this year, 3.6 percent in 2014, and 2.8 percent in 2015.

France's economy officially slipped back into recession in May. The IMF has forecast the economy will shrink 0.2 percent this year, more than the 0.1 percent initially predicted.

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