Slow growth forces France to cut budget again

November 7, 2011 - 7:25 AM

PARIS (AP) — France will cut its deficit by another euro7 billion ($9.6 billion) next year as slow growth threatens President Nicolas Sarkozy's promise to balance the country's budget.

Ahead of next year's presidential elections, Sarkozy has staked his credibility on hitting a series of deficit-reduction targets — and eliminating it entirely by 2016. But to do so, his government has repeatedly been forced to unveil new cuts and higher taxes as the growth projections that the original plan was built on proved unattainable.

Most recently, next year's growth projection was revised down to 1 percent.

So on Monday Prime Minister Francois Fillon announced a new round of austerity, including a freeze on the president's and government ministers' salaries and a cap on the increase in social security benefits.