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France to 'cut spending' despite fuel tax freeze

AFP  |  Brussels 

said on Tuesday that would stick to its EU commitments to public spending, despite a decision to suspend a fuel tax to quell fierce protests.

"There is a course set by the French Emmanuel Macron, which is to respect our European commitments, reduce spending, reduce debt and reduce taxes, and that course will be maintained," Le told journalists in

Earlier, had announced the suspension for six months of an increase in fuel tax after the country was rocked by intense street clashes and vandalism in over the weekend.

He will also freeze gas and over the winter in a bid to resolve the "yellow vest" crisis.

According to a European source, these measures should lead to a shortfall of nearly two billion euros in France's 2019 budget plans, equivalent to 0.1 percentage points of (GDP).

But the French suggested that the tax freeze would not undermine the government's public debt objectives.

"If taxes go down, spending will have to go down, because we don't want to leave debts to our children. These debts are already considerable," Philippe warned.

The EU projects that France's debt will hit 98.7 per cent of GDP in 2018, far above the 60 per cent of GDP limit set by European rules and more than the Euro zone average, which stands at around 86.9 per cent of GDP.

France's deficit in 2017 finally made it under the EU's deficit cap of three per cent of GDP, after years of being above the limit.

Before the tax suspension, was projected to have a deficit of 2.8 percent in 2019.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 20:25 IST