Business Standard

French government faces key test of economic reform plan

Image

AFP Paris
France's bid to embark on a programme of economic reform financed by big state spending cuts faced a parliamentary vote today that was shaping up as a test of the Socialist government's credibility.

President Francois Hollande and Prime Minister Manuel Valls have made a business-friendly programme of reductions in payroll and income taxes the centrepiece of their plan to lift the country out of the economic mire.

But it is a strategy that has provoked deep misgivings within their own party, with lawmakers questioning both the morality and the economic logic of the proposals to cut USD 70 billion from state spending over the next three years, partly through freezing a range of welfare benefits and the pay of most public sector workers.
 

Deputies in the lower house National Assembly were due to hold a consultative vote on the plans today evening, which while not decisive was described by Valls as "a moment of truth".

"It will profoundly leave its mark on the evolution of our country," he told parliament.

There is speculation that a significant number of Socialists could abstain on the vote, which would leave the government in the embarrassing position of having to rely on support from opponents on the right to secure parliament's endorsement for the centrepiece of its economic plans.

Valls, who unveiled a series of concessions on the spending cuts yesterday in a bid to appease the left of the party, told a meeting of the Socialist parliamentary group that today's debate amounted to a vote of confidence in the government.

Yann Galut, one of the Socialist deputies who had threatened to abstain, said on Twitter that he had been won over by the premier's address and concessions which will notably ensure some five million pensioners are no longer affected by the welfare freeze.

But leading rebel Christian Paul said he had not changed his position and predicted that "several dozen" of his colleagues would also abstain.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Apr 30 2014 | 12:38 AM IST

Explore News