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French lawmakers adopt welfare cuts before EU verdict
The French government secured the adoption of its social security budget for 2015 in parliament on Tuesday despite opposition from rebel Socialist lawmakers, 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 ($26.77 billion) in planned savings with caps on healthcare and welfare benefits, includes a controversial and unprecedented move to means-test family benefits.
It was adopted by 270 votes to 245 after 34 rebel socialist lawmakers abstained despite calls from the government for them to back its policy.
Rebel lawmakers from the ruling Socialist party have opposed 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 billion to 3.7 billion euros in cuts to its public deficit next year in the hope of helping its case with Brussels. Italy, also in the firing line, made a similar pledge.
The European Commission on Tuesday welcomed what it said were useful, constructive contributions from both countries on the budget talks but did not say if they would 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 beyond the 21 billion euros already agreed.
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.
"We will carry out these 21 billion," French Finance Minister Michel Sapin told lawmakers. "It will be the 21 billion, all of the 21 billion, but only the 21 billion, because France needs a budget that boosts the economy and society."
[Source: By Emile Picy, Reuters, Paris, 28Oct14]
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