* Lower house of parliament backs 2014 supplementary budget
* Rebel Socialists warn over social security budget vote
* Bill combines spending cuts, tax relief for households
* France targets 2014 public deficit at 3.8 pct of GDP
(Adds details on bill, further vote next week)
PARIS, July 1 France's lower house of parliament
backed a supplementary budget for 2014 by a large majority on
Tuesday, a relief for President Francois Hollande as his
Socialist party managed, for now, to contain opposition within
its own ranks.
Together with the social security budget on which lawmakers
will vote next week, the updated budget plans an extra 4 billion
euros in public spending cuts and tax relief for nearly 4
million households as Paris tries to meet deficit targets while
assuaging concerns of disgruntled voters.
The two bills had become the focus of discontent among
Socialist lawmakers, with some saying Hollande was doing too
much to cut tax on business and not enough to help low and
About a tenth of Socialist lawmakers had tried to push
amendments through. But they eventually agreed to back a text
that went some way to meeting their concerns, bringing 3.7
million households a total of 1.1 billion euros in tax relief.
The budget bill was adopted by 307 votes to 232.
However, the government still has to face opposition among
Socialist lawmakers on the social security leg of the budget,
which will be voted on next Tuesday.
One of the spokesmen of the rebel group, National Assembly
deputy Christian Paul, said they could not pass a bill he said
"finances support to business by freezing welfare subsidies."
The budget bill aims to keep France on track with its plan
to bring its public deficit down to 3.8 percent of GDP this year
and 3 percent - the EU target - next year. The European
Commission warned last month it considered France's forecasts
too optimistic and that it needed to do more to meet EU
deadlines in 2015.
The bill also includes a new system of road tolls to replace
a plan for nationwide charges on heavy vehicles. That proposal
was abandoned earlier this year amid widespread protests.
The budget is based on a government forecast of 1 percent
growth, which most - including official statistics office INSEE
- deem too optimistic.
In a fresh warning on growth, a survey by data compiler
Markit showed on Tuesday that French manufacturing activity
shrank at the fastest rate in six months in June as firms cut
production for the first time in five months and new orders
dropped at the quickest rate this year.
Hollande, the most unpopular president in French polling
history, is under pressure from some of his fellow Socialists to
loosen fiscal policy. But he also faces a growing campaign by
employers' groups for more guarantees on tax relief and changes
to some labour reforms.
Employers have threatened to boycott an annual conference
with labour unions on July 7-8 aimed at discussing reforms.
The supplementary budget bill will now go to the Senate, the
upper house of parliament, before a final National Assembly vote
on July 15.
(Reporting by Emile Picy; Writing by Ingrid Melander; Editing
by Mark John, Alexandria Sage and Mark Trevelyan)