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French parliament backs tax relief, more savings in supplementary 2014 budget
July 23, 2014 / 5:17 PM / 3 years ago

French parliament backs tax relief, more savings in supplementary 2014 budget

PARIS (Reuters) - France’s parliament backed a supplementary budget for 2014 by a comfortable majority on Wednesday, in a relief for President Francois Hollande following opposition from within his own party ranks.

The updated budget pares back public spending by an extra 4 billion euros ($5.4 billion) while granting tax relief to nearly 4 million households, as the unpopular government tries to meet deficit targets but also assuage the concerns of angry voters.

The revised budget, which scraps the inflation indexation of pensions above 1,200 euros and plans payroll tax cuts for next year, was adopted despite discontent among Socialist lawmakers.

Left-wing lawmakers have echoed trade unions that say Hollande is doing too much to help business and not enough for low-income households. But they voted in favor of the law.

The 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 next year.

Focus will now switch to the 2015 budget, which the government will be working on during the summer before sending the draft to the European Commission by mid-October. That budget will be key as this is the year Paris must bring its public deficit down to the EU limit of 3 percent after being granted a two-year reprieve by its EU peers.

The European Commission and the IMF have warned they consider France’s growth and deficit forecasts too optimistic.

Hollande said on Monday that his government still hoped to meet the fiscal targets but that this might be tough because of weaker-than-expected growth. France will not go beyond 50 billion euros in curbs on public spending planned for 2015-2017, he said.

($1 = 0.7428 Euros)

Reporting by Emile Picy; Writing by Ingrid Melander; Editing by Hugh Lawson

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