French PM seeks mass support to fight 'crushing' debt

Prime Minister Jean-Marc Ayrault on Tuesday urged the French to rally behind efforts to tackle a "crushing" debt burden after an audit warned of a 43-billion-euro budget hole.

He was speaking before his leftist government won a vote of confidence later in the day in the National Assembly.

Ayrault, outlining the new Socialist government's agenda in parliament, also admitted the crisis was "unprecedented" and said debt servicing charges had become untenable.

In Europe, the eurozone crisis still burns and at home his finance minister has just warned that French economic growth will be lower than forecast.

"The debt burden has become crushing. The state pays nearly 50 billion euros ($63 billion) to its creditors annually," Ayrault said.

"I have come here today to appeal to you and, through you, all French people for a mobilisation because it is not too late to react and succeed," he said, appealing for "patriotism," and adding: "An indebted France is a dependent France."

Ayrault said the aim of the belt-tightening was to have a balanced budget in 2017 as he squarely blamed the economic mess on the previous centre-right government of president Nicolas Sarkozy.

Ayrault said that between 2007 and 2011, France's debt grew by 600 billion euros "to nearly 1,800 billion euros today, or 90 percent of the wealth produced annually in France."

The prime minister of President Francois Hollande -- whose electoral mantra has been growth over austerity and who famously said he does not "like the rich" -- sought to strike a conciliatory tone, stressing he was "not an enemy of wealth."

The projected two-year shortfall of up to 43 billion euros by the state auditor is what has to be covered with spending cuts and tax increases to reduce the overall public deficit by stages to targets for this year and next.

Ayrault's speech was being closely watched by voters, businesses and the right-wing opposition but also by financial markets worldwide as France along with Germany is a key player in resolving the eurozone debt crisis.

Its big public debt also means France could become a target for bond market speculation if the eurozone's latest emergency measures do not calm things down.

The prime minister revised growth forecasts for this year to 0.3 percent from 0.5 percent and for next year to 1.2 percent from 1.7 percent.

During his election campaign, Hollande pledged to reduce public debt, the accumulation of past deficits, based on the earlier, more optimistic, forecasts. France has run budget deficits since the 1970s.

France has promised its European Union partners it will reduce the public deficit from 5.2 percent of output in 2011 to 4.5 percent at the end of this year.

Hollande had pledged to create new jobs, impose a 75-percent tax on income of more than one million euros and has already committed the government to raising the minimum wage by 2.0 percent.

The audit office said that for 2013, on the basis of a commitment of reducing the deficit to the EU ceiling of 3.0 percent of gross domestic product, widely-based taxes such as VAT sales tax or the complementary social CSG tax, would have to be raised, at least temporarily.

In the evening, the government under Ayrault won a vote of confidence.

Out of the 527 votes cast in the 544-seat assembly, 302 were for and 225 against the new government, said the legislature's president Claude Bartolone.

Deputies of the Socialists, ecologist EELV and radical left voted for the government while the Left Front abstained. The Conservative UMP and the UDI or Union of Democrats and Independents voted against.

In a brief speech, Ayrault thanked MPs for "trusting the government".

"The government can't move forward if it does not have the confidence of the majority: you have clearly expressed it," he said. "Now we have our roadmap and together we will succeed."

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