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France unveils slashed 2012 budget

France has proudly presented next year's budget as the first to cut spending since the Second World War, as it tries to convince nervous investors that it will get its debts under control.

But economists baulked at the claim and said the cuts in the 2012 budget are not substantial enough to meet deficit targets laid out by the government - or to reduce the country's debt load.

France has not balanced its budget in three decades and for years flouted EU rules which require members to keep their deficits under 3% of GDP.

Paris was not alone in ignoring the spending rules, and the result has nearly brought the eurozone to its knees: Ireland, Portugal and Greece have all needed bailouts to pay their bills after investors refused to lend to them, and Italy and Spain have seen their borrowing costs skyrocket.

France's own bond yields - the interest rate investors demand to lend a country money - rose this summer amid fears that its debts were too high.

In response, the government unveiled a series of measures - mostly new taxes - which were reiterated in today's budget. Among other measures, it plans to increase taxes on the wealthy, levy a tax on sugary drinks and close loopholes.

It also promised to cut around 30,400 public jobs next year by not replacing one in two posts vacated by people retiring.

"Public debt reduction is a priority. It happens by first reducing the public deficit," a statement from the Budget Ministry said.

Budget Minister Valerie Pecresse told her colleagues that - including the austerity measures - next year's deficit should fall to 80.8 billion euros (£70.2 billion) - nearly 15 billion euros (£13 billion) smaller than this year's.

But economists said that, while that claim may be true on paper, next year's spending was almost certainly going to outstrip this year's.

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