Speaking in Paris on Thursday, French Finance Minister Laurent Fabius said that plans announced by President Jacques Chirac in his re-election campaign to cut taxes whilst increasing spending would be impossible to implement under the EU stability pact.
M. Fabius, who is the special advisor to M. Chirac's challenger in the forthcoming presidential elections, Prime Minister Lionel Jospin, observed that:
'It is not possible to raise spending massively while at the same time cutting taxes massively, because we would be outlawed in Europe.' He added wryly: 'Are we going to tell the other countries that our case is special, because we had elections?'
The President has announced that he favours pushing the target date for a balanced budget back from 2005 to 2007.
However, M. Fabius has commented that, given forecasts of several years of sustained growth, it should be relatively easy to balance the French budget. He has also stated that the requirement of the European Union's stability pact, namely a budget deficit of less than 3% of GDP for all participating countries, is 'completely reasonable'.
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