Sarkozy unveils reforms, savings not seen until 2011

President Nicolas Sarkozy promised a major rationalization of the French state, but indicated that savings would not come until 2011 and left questions unanswered over how he planned to balance the budget.

Sarkozy said France needed to reduce its army of civil servants and introduce a wholesale shake-up of its bureaucracy, including the military administration and diplomatic service. “The time for reforms has come,” he said in a speech at the Economy Ministry, and spending cuts were vital. “Each year, and for the past 20 years, state spending exceeds receipts by 20 percent… We cannot continue like this.”

The budget ministry estimated that the package of some 150 measures would provide gross annual savings of 7 billion euros ($11 billion) by 2011, although at least 1 billion of this would be handed back to civil servants by way of pay incentives.

Such a net saving represents just 2 percent of state spending and compares with an annual budget deficit of 50 billion euros, suggesting the government faces an uphill battle to balance its books by 2012 as promised to the European Union.

The opposition Socialists have accused the government of quietly introducing an austerity programme to rein in the deficit, which hit 2.7 percent of gross domestic product last year, against a target of 2.4 percent.

Sarkozy’s government last week raised its 2008 deficit projection to 2.5 percent of GDP from 2.3 percent previously as a slowdown in growth is expected to weigh on tax receipts.