France’s Socialist government on Friday unveiled its 2013 budget, comprising tax hikes and spending cuts, designed to plug a 30-billion-euro shortfall in the country’s finances.

Described by President Francois Hollande as the toughest in 30 years, the budget is aimed at reassuring financial markets by keeping France on course with its ambitious deficit-reduction programme.

The government wants to cut the budget deficit, from 4.5 per cent of gross domestic product this year to 3 per cent in 2013, an unprecedented effort at a time of economic stagnation.

Finance Minister Pierre Moscovici defended the target as “necessary for the credibility of the country.” Renouncing on the objective would cause the interest rates on France’s public debt to spiral, as they had done in Spain and Italy, “and I don’t want that,” he told Europe 1 radio.

Hollande has sought to spare the poor and middle-classes in his first budget, which is primarily aimed at the wealthy and is based on a growth forecast of 0.8 per cent.

Of the 30 billion euros sought by the government, 20 billion will come from tax hikes on wealthy households and big businesses. The remaining 10 billion euros will be obtained by freezing spending in most departments barring education, justice and security.

Defence, transport and culture will all be affected, according to details of the budget bill, which outlines 370.9 billion euros in spending.

Under the new rules, people who earn more than 150,000 euros a year will pay tax at a new top rate of 45 per cent. The rich will also be hit by higher wealth taxes and taxes on investment revenue.

There was some relief over plans to introduce a 75-per-cent income tax on incomes of over 1 million euros, with the so-called “solidarity tax” now being implemented for only two years.

Opposition parties have criticized the government’s refusal to give itself some breathing space on the 3—per—cent deficit target, saying that steep tax hikes risk feeding into a spiral of slowing growth that would require further austerity measures next year.

Figures released on Friday showed the economy stagnant in the second quarter of 2012 for a third consecutive quarter.

Far-right National Front leader Marine Le Pen called the budget “an absurd hyper-austerity” which would “put France on the same path as Greece, Ireland, Portugal and Spain, a path that goes right into the wall of the euro.”