French government urges lawmakers to vote welfare cuts before EU verdict

Reuters News
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Posted: Oct 28, 2014 8:09 AM

PARIS (Reuters) - The French government urged rebel Socialist lawmakers on Tuesday to back cuts made to the 2015 social security budget, a day before the European Commission's verdict on France's deficit-cutting plans.

Paris wants to obtain another two years to bring its total public deficit in line with EU limits, hoping the lack of growth and its efforts to rein in future spending will mollify Brussels despite its exasperation with its repeated fiscal slippages.

The social security budget, which accounts for close to half of next year's 21 billion euros total planned savings with caps on healthcare and welfare benefits, includes a controversial and unprecedented move to means-test family benefits.

"I call on the sense of responsibility and solidarity (of lawmakers)," Social Affairs Minister Marisol Touraine told France 2 television, adding that she trusted the budget would be adopted in a vote later on Tuesday.

"Now is the time to live up to our responsibilities."

The vote is set to be tight, with rebel lawmakers from the ruling Socialist party telling Reuters they would abstain. They have already done so on various budget bills but never gone as far as causing a bill to be rejected outright. Thirty-nine abstained last week on a vote on the state's 2015 revenues.

The French government on Monday announced an extra 3.6 to 3.7 billion euros in cuts to its public deficit next year in the hope to help its case with Brussels. Italy, also in the firing line, made a similar pledge.

The European Commission welcomed on Tuesday what it said were useful, constructive contributions from both countries on the budget talks but did not say if those will be sufficient. The EU executive has the right to reject the 2015 budget.

France argues that the update to its budget should be counted as an effort to cut the structural budget deficit, which strips out the effects of the economic cycle.

But the headline deficit will still be well above the EU's 3 percent of GDP cap and there will be no new spending cuts - the smaller deficit will come largely from new calculations including lower interest rates on France's debt and a smaller-than-expected contribution to the EU budget.

(Reporting by Emily Picy and Gregory Blachier; Writing by Ingrid Melander; editing by Mark John)