PARIS (Reuters) – The French consider themselves an exceptional lot. With much of the world’s finest food, wine, landscape, architecture, literature and arts, it’s hardly surprising.
But the French economic exception faces a reality check almost three years into the euro zone’s sovereign debt crisis.
France’s enduring ability to defy economic gravity – adding new taxes on top of one of the highest fiscal burdens in Europe, preserving short working hours, job protection, early retirement and generous welfare benefits – is about to be tested.
President Francois Hollande has promised to bring the deficit down to 3 percent of gross domestic product in next week’s 2013 budget from a forecast 4.5 percent this year.
Unlike many European peers, he plans to achieve two-thirds of the adjustment by raising extra revenue, despite a virtually flat economy, and less than a third by freezing public spending in nominal terms.