Aug. 24 - France will try to shave billions off its public deficit by targeting tax breaks and incentives. Kirsty Basset reports.
French Ministers leave a cabinet meeting in Paris, after discussing deficit cutting measures worth billions of dollars. Some tax breaks and incentives are expected to be scrapped when the measures are announced later on Wednesday creating as much as 10 billion euros in extra revenues. French President Nicolas Sarkozy's government is hoping to cut the deficit from 7.1 per cent of GDP last year to 5.7 per cent this year, and then further to 4.6 per cent next year. Ministers have been working on a plan since early this month, after French banking stocks took a huge hit over speculation the country could lose its triple A credit rating. But the measures aren't likely to be as dramatic as the spending cuts being imposed in Italy. Unions there are planning a one day general strike for September 6 over an austerity package that they say unfairly targets labour income over tax evasion. Germany is also coming under pressure, with further evidence Europe's largest economy is slowing. New data shows that business morale in Germany has suffered its steepest drop since the collapse of Lehman Brothers in late 2008. Grant Lewis is Head of European Research at Daiwa Capital Markets. (SOUNDBITE)(English) HEAD OF EUROPEAN RESEARCH AT DAIWA CAPITAL MARKETS, GRANT LEWIS SAYING: "I think the outlook for Germany is less rosy than it was a month ago, and certainly less rosy than it was six months ago. Clearly, the global economy is slowing. Germany as a big net exporter is suffering form the fact that the global economy is slowing down." Economists don't believe a recession is on the cards for Germany but a weakening economy could make Germans more reluctant to splash out money to help debt-ridden euro zone countries. Kirsty Basset, Reuters.