France

French budget 2019: Government unveils major tax cuts as growth flags

The former investment banker's poll ratings have dived in recent weeks as growth has slowed despite a series of reforms presented as unavoidable shock treatment for getting France on solid financial footing.

Critics say most people have been left behind by Macron's policies so far, which have seen him raise taxes on retirees while cutting a wealth tax on top earners.

Pensions and welfare benefits will be shaved further in the 2019 budget — Macron complained in June that France spends "a crazy amount of dough" on social programmes.

And 4,100 more public sector jobs will be axed as Macron aims for a deficit of 2.8 percent of GDP, below the 3 percent limit set for EU members.

Higher taxes on fuel and cigarettes will also hit consumers next year.

But the government says the pillar of the 2019 budget will be a combined 20 billion euros ($23.5 billion) of tax cuts for businesses and six billion euros in tax relief for households, including a gradual end to an annual housing tax.

"The long-term goal is to build a new French prosperity that will benefit all French people in all regions," Finance Minister Bruno Le Maire said as he presented the budget in Paris.

But he acknowledged that results from Macron's reform drive so far "are unsatisfactory compared with our European neighbours, and we certainly don't intend to stop here".

"We're doing less well than our European partners on unemployment, growth, the deficit and debt," Le Maire said.

Ratings sink

Patience is wearing thin for many as unemployment has barely budged since Macron's election in May 2017, standing at 9.1 percent.

The 40-year-old centrist captured the presidency with a pledge to shake up an economy he says is held back by excessive regulations and rigid labour laws.

But growth has been slowing and is now widely expected to reach just 1.6 percent this year, and the government is forecasting an uptick to just 1.7 percent next year.

A poll released Sunday found just 29 percent satisfied with Macron's leadership, while a separate survey last week said only 19 percent of French people held a positive view of his record.

He has promised to balance the budget in France for the first time in more than 40 years by the end of his term in 2022 — a task that will require an overhaul of state spending.

That has led him to take on France's powerful labour unions to a degree not seen in decades, overcoming stiff resistance to new laws making it easier to fire people and ending the privileged status of rail workers.

He has also promised to cut 120,000 public sector jobs by the end of his term in 2022, a daunting prospect in a country known for its expansive bureaucracy which guarantees civil servants jobs for life.

Yet Macron has appeared to be dismissive of the concerns of everyday voters, most recently telling an unemployed gardener to go get a job in a restaurant or construction instead.

His reformist zeal has also exposed him to criticism that his policies favour businesses in particular, and he has struggled to shake off perceptions that he is "president of the rich".

The vow to cut social spending is unlikely to reassure the lowest earners in France, where the number of people living below the poverty line has swelled to 14 percent of the population, according to national statistics office INSEE.

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