French Prime Minister Francois Fillon on Monday said meeting France’s deficit reduction targets would require 65 billion euros in savings over the next five years and announced more cuts to the 2012 budget.

“The time has come to adjust France’s efforts,” he said, adding: “The word bankruptcy is no longer an abstract word.” Mr. Fillon, who already announced 12 billion euros in tax increases and spending cuts in 2011-2012, announced a further 0.5 billion euros in cuts in 2012. The extra cuts make the 2012 budget one of the toughest since 1945, according to Mr. Fillon.

The extra cuts were required after the government revised its 2012 growth forecast from 1.75 per cent to 1 per cent, as part of a plan to slash the budget deficit from 5.7 per cent this year to 3 per cent by 2013.

The salaries of the President and government ministers would also be frozen.

Bringing the budget deficit and public debt under control is seen as crucial to France hanging onto its top AAA credit rating.

France’s public debt is running at 86 per cent of gross domestic product, one of the highest in Europe.

“We have to get out of this dangerous spiral,” Mr. Fillon said.

Among the tax hikes he announced were an increase in the lowest VAT rate of 5.5 per cent to 7 per cent and a temporary corporation tax increase of 5 per cent for companies with a turnover of more than 250 million euros.

A planned increase in the minimum pensionable age from 60 to 62, which had been due to be implemented by 2018, would be brought forward to 2017, he said.

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