Nov.07 - France announces more than 65 billion euros of tax hikes and budget cuts over the next five year, imposing further pain on voters to protect its credit rating and curb its deficit. Matt Cowan reports
More austerity is coming to France. The euro zone's second largest economy announced 65 billion euros of tax hikes and budget cuts over five years in an effort to curb its deficit and protect its credit rating. French Prime Minister Francois Fillon said the time had come for France to break its damaging habit of spending more than it had. SOUNDBITE: Francois Fillon, French Prime Minister saying (French) : "To arrive at a zero deficit by 2016, which is our goal, we will have to save almost 100 billion euros. It is unthinkable to do it by exclusively increasing taxes as the opposition suggests. It will only happen by tripling income tax or doubling VAT. There is therefore no other solution to reduce debt, to reduce expenditure and to adjust taxation in a targetted manner." Still the timing of the measures are seen as posing their own political risk, with presidential elections due in six months. President Nicolas Sarkozy's centre-right government says extra spending cuts and tax hikes are urgently needed to keep French finances from going off the rails after it cut its growth forecast for next year. Analysts and opposition politicians said the government's outlook of 1 percent growth was still too optimistic and the latest measures might fall short. Matt Cowan, Reuters.