France Is Facing It`s Debt Crisis

French Prime Minister Francois Fillon delivers a speech to announce the government's austerity measures plan in Paris on Monday. Photo: Bloomberg

France Cuts Frantically As Italy Nears Debt Spiral -- The Telegraph

France has unveiled the toughest austerity measures since World War Two despite the looming danger of a double-dip recession, vowing to slash borrowing by €65bn over the next five years in a last-ditch effort to save the country's AAA rating.

"We wish to protect the French against the grave problems facing other European countries. Bankruptcy is not an abstract word," said premier Francois Fillon.

The belt-tightening plan -- the second package since August, taking total cuts to €112bn -- include a 5pc super-tax on big firms, a rise in VAT on restaurants and construction, and cuts on pensions, schools, health, and welfare. It is the latest squeeze in a relentless campaign of fiscal tightening across the eurozone.

"It is like the 1930s: imposing austerity on countries already in recession is the way into a death spiral," said Danny Blanchflower, a former UK rate-setter.

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My Comment: Unlike most of Europe, it appears that the french are now listening to the Chinese.