(Reuters) – French Finance Minister Bruno Le Maire will take a more stringent approach to public finances, he told the Financial Times ahead of a June 19 conference expected to unveil large cuts in public expenditures.
In an interview published on Wednesday, Le Maire promised a renewed push to cut public spending, saying France needed to stick to its debt reduction program after narrowly avoiding a downgrade by ratings agency S&P this month.
Although S&P retained its AA rating for France’s sovereign debt, it stayed cautious about the outlook on account of strained public finances.
“The decision by S&P is an incentive to do more and to do better,” Le Maire said. “We need to stick to our debt reduction program and to cut public expenditures.”
France, its debt among Europe’s highest, at nearly 110% of economic output, said last month it planned to freeze 1% of the budget of each ministry, following an earlier decision to cut 5%, in a bid to make good on deficit reduction commitments.
It will also end subsidies this summer for natural gas. Other areas being targeted are a buy-to-let tax credit known as the Pinel law and programmes that subsidise wages of some young workers, the paper said.
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“As France nears full employment, it can also reduce the level of support to the labour market,” Le Maire added.
However, the government would not cut public spending severely, he said, and push through business-friendly reforms instead.
“Austerity is not an option … This would be an economic and political mistake,” Le Maire said.
(Reporting by Kanjyik Ghosh and Abinaya V in Bengaluru; Editing by Tom Hogue and Clarence Fernandez)