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Macron’s government defends French tax cuts and spending with 2022 budget By Reuters


© Reuters. French Finance Minister Bruno Le Maire is present at a news conference in Paris to announce the French budget 2022. This was held September 22, 2021. REUTERS/Gonzalo Fuentes


By Leigh Thomas

PARIS (Reuters) – French President Emmanuel Macron’s government defended its tax cuts and unprecedented pandemic spending on Wednesday as it turned in its budget plans for 2022, a presidential election year.

    The government’s spending of 130 billion euro ($152.5billion) since the COVID-19 crisis to preserve households in financial stability has been criticized by right-wing candidates seven months prior to the vote.

Bruno Le Maire (Finance Minister) said that spending has kept the euro area’s second-largest economy from going under, as COVID restrictions had severely restricted activity around the world.

Le Maire said that the budget for 2022 was spent responsibly and made sure the money went to the right use. We take budget management seriously, and we have a responsibility to keep the public finances in check.

    The government projects that the economy of 2.3 trillion euros will expand 6% in 2019, thanks to 70 billion euro in additional stimulus. This will be after it has recovered from the financial crisis. It will slow down to 4% by 2022.

The government already reduced its estimates of the deficit for 2021-2022, as the French economy is recovering stronger than expected.

Le Maire claimed that the government would have still delivered 50 billion Euros in tax reductions to companies and households over Macron’s 5-year tenure, despite extraordinary pressure on the public finances.

    As the economy gets over the coronavirus crisis and supports are removed, it expects the budget deficit for the public sector to fall from 8.4% to 4.8% of the gross domestic product next year.

    The government might be exaggerating the deficit, according to an independent panel of budget supervision. Strong job markets should bring in higher tax income than was expected.

    France’s debt is expected to rise to 116% this year. The panel called on the government to make use of any financial gains to lower debt. It also warned against the temptation to increase spending in the run-up to the next election.

    Le Maire stated that 8 billion euros originally budgeted in 2021 for support to the crisis, but are no longer required, would mainly be used to cut down on deficit.

600 million euros would be spent on subsidised energy vouchers, increasing them by 100 euro to aid poor households in coping with the rising prices of winter.

    Le Maire stated that the bill would include additional spending for a long-term investment program to be revealed in the next weeks, and income support plans to assist young job seekers.

    Le Maire argued for an increase in security spending. This was a key issue prior to the April election. With the budget of the military increasing by 1.7 billion euro, that of the interior ministry rising by 1.4 billion and the justice ministry increasing by 700 million euros respectively, Le Maire said.

($1 = 0.8524 euros)

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