French PM urges end to spending addiction

Prime Minister Edouard Philippe says it’s time to end France’s addiction to easy public spending, promising to cut expenditures over the next five years and rein in debts he says are at an unacceptable level.

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New president Emmanuel Macron regards taming spending and reducing its budget deficit as key to winning the trust of European Union partner Germany and persuading Berlin to embark on reforms to shore up the bloc.

“The French are hooked on public spending. Like all addictions it doesn’t solve any of the problems it is meant to ease. And like all addictions it requires willpower and courage to detox,” Philippe told the National Assembly to applause on Tuesday.

Philippe said that for every 100 euros Germany raised in taxes it spent 98 euros, while France spent 125 euros for every 117 euros levied in taxes.

“Who really believes this situation is sustainable?”

The government and its program comfortably won a vote of confidence. The lower house, dominated by Macron’s Republic on the Move party, voted 370 in favour of the government with only 67 voting against – mostly far-left and far-right lawmakers.

Some 129 people abstained, with a large number of conservatives from the Republicans party not opposing the government.

Philippe’s talk of austerity comes just as other major economies such as Germany, the United States and even Britain are signalling an easing of fiscal policy to underpin growth.

But last week France’s independent auditor revealed a more than 8 billion euro funding shortfall in this year’s budget, forecasting a deficit once again above the EU cap of 3 per cent of national income.

Philippe, a relatively unknown conservative before he was picked by Macron, said his objective was still to haul the deficit below the EU’s cap this year and he would target cuts in spending by three per cent of national income over five years.

Jean-Luc Melenchon, head of the far-left party France Unbowed, and far-right National Front leader Marine Le Pen accused Philippe of ignoring the anger of voters with measures they said would hurt their spending power.

Philippe acknowledged that a record high abstention rate in June’s parliamentary election meant his government would have to tread carefully with its social and economic reform agenda, but that France could not ignore its problems.

On Europe, Philippe stressed Macron’s stance that any talks with Britain over its future relationship with the EU would only come after orderly negotiations over its exit from the bloc.

“Conducting orderly negotiations over the United Kingdom’s exit will be a prerequisite for the future relationship’s framework,” Philippe said.