World Bulletin/News Desk
France's Socialist government insisted on Friday it would press ahead with spending cuts and promised tax reforms next year, denying reports it was watering down flagship measures such as a 75 percent tax on the rich.
President Francois Hollande, elected in May on a pledge to kick-start growth and raise taxes on the wealthy, said the stagnant economy made it crucial for France to hit its public deficit target of 3 percent of gross domestic product (GDP) next year or risk losing investors' trust.
Hollande said that by holding state spending steady in nominal terms next year -- excluding debt servicing and pension payments -- his government would save 10 billion euros in inflation-adjusted terms.
However, that would amount to just one-third of the more than 30 billion euros in savings which Hollande says are needed to hit next year's deficit target and stay on course to balance the budget by the end of his five-year mandate.
With his government refusing to cut staffing levels, the bulk of the adjustment will have to come from tax rises.
"This will be the biggest effort in 30 years," Hollande said at a ceremony at the state auditor's office, promising "audacious" tax reforms and other changes.
France's deficit has not slipped beneath the EU threshold of 3 percent since 2007, when it stood at 2.7 percent of GDP.
After years of crisis that have driven state debt to 90 percent of GDP, Hollande said servicing payments were now the second largest budget item, making adjustment more complex.
Markets and EU partners alike see the spending plan as a crucial test of Hollande's reformist mettle, but there is little sign yet of far-reaching reforms next year.
France has not balanced its budget since 1974 and state spending is now 56 percent of economic output - second only to Denmark in the West.
The budget will be presented at a Sept. 28 cabinet meeting, pushed back by two days to allow for Hollande's trip to the United Nations' General Assembly in New York, officials said.
Following newspaper reports that the government was preparing to water down a pledge to tax earnings above 1 million euros a year at 75 percent, cabinet heavyweights quickly came out to say it would go ahead as promised.
"President Francois Hollande made a clear, strong commitment during the campaign to tax high earners at 75 percent," Finance Minister Pierre Moscovici told local media. "This promise will be strictly respected."
Labour Minister Michel Sapin, meanwhile, said the measure would go ahead but some nuances would be introduced: while the threshold of 1 million euros for a single person would stand, it would be set higher for couples.
Referring to reports in right-leaning Le Figaro that artists and sportsmen could be exempted, Sapin said the tax would be based on average earnings over a long period so those receiving a temporary spike in their earnings would not be hit.
He did not comment on reports in Le Figaro newspaper that the CSG and CRDS social charges would be included in the headline rate -- suggesting the effective rate of income tax would be around 67 percent.
"We have not finalised the proposal ... It will be decided next week: between the reality of next week and the suppositions of today there may be some difference," Sapin said.
Hollande and Prime Minister Jean-Marc Ayrault both later said that the government would not backtrack on the tax, although they did not offer details on its scope.
"The French are going to be called on to make an effort," Hollande said during a visit to the eastern city of Evian. "There will be budget savings and solidarity will be necessary, especially from high earners who must contribute more."
Finance Minister Pierre Moscovici last week told business leaders the government was seeking an "intelligent" way to implement the tax without driving away investors.
Le Figaro, without citing sources, also said the government would postpone plans to raise corporate tax on large firms to 35 percent from the current rate of 33 percent, while slashing it to 15 percent for small businesses.
Talks are reportedly underway for a number of investment projects, including in pharmaceuticals and automotive assembly, but no final investment agreements are expected this week.
The yuan will be the world's third largest currency after the U.S. dollar and euro, a Chinese report predicts.
Unemployment currently stands at 12.7 percent in Kenya and affects 30 percent of the country's population
GM so far this year has recalled about 14.7 million vehicles worldwide with switch-related issues and has linked at least 16 deaths to those issues.
The deal includes hydropower and nuclear power plants in the South American country.
State-run think tank Korea Institute for Defense Analyses (KIDA) reported earlier this month that a twin-engine version of the fighter jet is expected to cost around 8.5 trillion won
Western officials have repeatedly warned Iranian counterparts over the past six months that more economic pain is a risk for an OPEC member whose oil exports have already shrunk to a fraction of what they could have been
The EU's employment commissioner said he has asked to meet with Microsoft to discuss the social impact of the layoffs.
Although China has promised to invest in Brazil for years and failed to deliver, the pace of deals is picking up with a focus on deficient infrastructure.
The financial aid would be used for rebuilding houses and public buildings, the rapid restoration of water and energy supplies and urgent assistance for those still without proper shelter.
Washington and Brussels say Moscow has been fanning separatist violence in eastern Ukraine and broadened their sanctions, sending Russian shares and the rouble currency down.
Chinese Trade Minister Gao Hucheng said his country would not sit idly by while the United States harmed the rights of Chinese companies.
Beijing claims about 90 percent of the South China Sea, whose estimated energy potential varies widely. Vietnam, the Philippines, Malaysia, Brunei and Taiwan also claim parts of the key waterway.
Trade between China and Brazil soared to $83.3 billion last year from $3.2 billion in 2002, with iron ore, soy and oil making up the bulk of Brazilian exports.
In the latest recall, about 574,000 of the affected cars were sold in the United States, about 450,000 in Germany and about 189,000 in the United Kingdom
The $17 billion dollar Central Asian pipeline project could revive Afghanistan's economy said a state advisor, but security and political issues have deterred investors.