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French report French report
by Euro Reporter
2011-10-26 07:15:32
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Eyes more belt-tighting as election looms

With France's economic growth outlook fast deteriorating, President Nicolas Sarkozy increasingly has little choice but to launch a new round of belt-tightening six months from a presidential election. Sarkozy's conservative government had hoped that an 11 billion euro savings package for 2012, unveiled late in August, would be enough to keep France's deficit targets in reach next year and protect the country's prized AAA credit rating. But the finance and budget ministers have both admitted that poorer-than-expected growth and increased scrutiny from ratings agencies mean more budget measures are possible. Economists and some lawmakers say further savings would have to be worth at least 5 billion Euros ($6.9 billion).

That leaves Sarkozy -- already unpopular due to three years of economic gloom -- to work out the best timing to break the bad news to taxpayers and decide which groups should bear the bigger burden as the April 2012 presidential election looms. Budget Minister Valerie Pecresse said on Tuesday the government would not shy away from asking the French to shoulder more budget cuts if necessary, with a revision to growth targets likely in the near future. "Time is working against us. We must not lose any time," Jean-Pierre Raffarin, a senator and former prime minister, told Les Echos business daily. "We've got to make an effort like our (euro zone) partners. These new efforts have got to be big and lasting."

The centre-right government is likely to steer clear of painful austerity cuts or broad tax hikes like those that euro zone neighbours Italy and Spain have embarked on to reassure investors and ratings agencies about their public finances. Instead, likely targets are the myriad tax exemptions that mean many French pay little income tax and cost the state billions of Euros a year. Whatever course the government takes, Baroin promised that public sector salaries would not be hit. Ratings agency Moody's raised the pressure on the government last week when said it could put France's top-notch rating on negative outlook in the next three months if the costs for helping to bail out banks and other euro zone members overstretched its budget. The government has repeatedly stated that it will take whatever measures are necessary so it can reduce the public deficit from an estimated 5.7 percent of gross domestic product this year down to an EU limit of 3 percent in 2013.

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First Lady refuses media to expose her neonate


Carla Bruni Sarkozy, France First Lady just gave a birth to a daughter with President, Nicolas Sarkozy. And this neonate is the first one born during President’s term in France history. Bruni is 43 year-old, gave a birth to a girl in a private hospital in Paris at 7 o’clock on Oct 19. They are both safe and well. The neonate hasn’t got a name formally.

Bruni married with France President Nicolas Sarkozy in 2008. This neonate is their first kid also daughter. President Nicolas Sarkozy used to own two marriages and three sons; Bruni has a son with others. In addition, France presidential palace stated that it belongs to personal privacy. Thus, it is not necessary to announce neonate’s photos and related news to public. Bruni also said she will try her best to protect her daughter as well as refuse media to expose her daughter.

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France backs tax on soft drinks


France's parliament backed a tax on drinks containing added sugar or artificial sweeteners on Friday in a move that is expected to raise 280 million Euros ($389 million) next year. The tax equates to an extra 2 euro cents on the price of a typical 33-centilitre (11 ounce) can of soft drink, said Gilles Carrez, general reporter for the Finance Commission in the lower house of the French parliament. Half of the tax raised will go into France’s state health insurance fund to help combat obesity, while the other half will be used to reduce costs related to agricultural workers.

French Budget Minister Valerie Pecresse, who originally opposed a tax on drinks with added sugar, agreed to back the move after so-called “light” drinks containing artificial sweeteners were also included. The former will generate 240 million Euros, while the latter will account for the remaining 40 million, Carrez said. The head of France’s Ania national food industry association slammed the move and called the justification for the tax "ridiculous." “It won’t combat obesity at all,” Jean-Rene Buisson told RTL radio. “The argument the way it is presented by the government is completely unacceptable.”

Buisson added that the government should be clear whether the tax was designed to help reduce its deficit. Lawmakers in the United States have also looked at introducing a soda tax but have come up against heavy lobbying by the beverage industry, dominated by Coca-Cola, PepsiCo and Dr Pepper Snapple Group. Beverage analysts at Stifel Nicolaus wrote in a note to clients that the inclusion of artificially sweetened drinks had come as a surprise.



        
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