France’s Macron to slash local government spending by €13 billion

© IAN KINGTON / POOL / AFP | French President Emmanuel Macron calls for local government cuts at the National Conference of Territories, Paris, July 17, 2017.

French local authorities will have to cut spending by 13 billion euros by 2022, President Emmanuel Macron said on Monday.

Emphasising that “intelligent” savings can be found, Macron promised there would “deep reflection” on the matter. Anticipating pushback from unions and the left, Prime Minister Édouard Phillipe said the government will not change its course.

Macron has undoubtedly already made his mark on the international stage, with the now infamous — and multiple — bone-crunching handshakes with US President Donald Trump and his surprisingly hostile joint press conference with Russian President Vladimir Putin in Paris.

But now he is turning his attention to critical domestic issues.

Macron is plunging feet first into one of France’s most serious problems: its ballooning budget deficit. The big question will be if this is the president who will finally succeed in reining in French spending.

Macron’s government also plans to scrap a local government tax for 80% of householders – even though this tax is local government’s principal source of funding (which goes towards services like schools and roads).

This follows on from the government’s announcement last week of 64.5 billion euros of cuts over the next five years – 4.5 billion euros more than originally announced – in order to reach the EU target of a budget deficit below 3% of GDP.

The French have seen what kind of president he will be internationally, and now they are getting a glimpse of the domestic Macron.

“We don’t really believe this will happen”

They propose to make up for the shortfall by increasing national income tax.
But local authorities doubt that this compensation will make up for their estimated 8.5 billion euro black hole this will create – especially after Macron’s statement on spending cuts.

“We don’t really believe that will happen,” Philippe Bas, Senator for the conservative Les Républicains party (LR), commented to Sud Radio.

This 13-billion-euro cut has come as a shock to many, as Macron pledged only 10 billion euros of cuts during the election campaign.

François Baroin, head of the French mayors’ association and an LR Senator insisted on Monday that local authorities have already made 34% of France’s savings in public expenditure over the last three years, while stating that “80 percent of the debt is the responsibility of the state”.

However, the International Monetary Fund (IMF) on Monday lauded Macron’s “ambitious” reform programme, saying his spending cuts and tax reforms could “go a long way in addressing […] longstanding economic challenges”.

(FRANCE 24 with AFP)

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