IBTimes.com

Amidst mounting street protests, France has unveiled a budget for 2011 that features 40-billion euros in spending cuts, which is designed to cut the government's deficit.

Measures of the budget include a planned reduction of more than 30,000 government workers with no replacements; the removal of certain tax breaks worth 10-billion euros.

However, no new taxes were introduced.

"The strategy excludes any notion of a generalized tax rise, as this would penalize economic growth," said a presidential statement.

The budget also assumed an economic growth rate of 1.5 per cent this year, 2 per cent in 2011 and by 2.5 per cent in 2012 – which many economists believe are overly optimistic.

The government is predicting the deficit will reach a record of 7.7 percent of GDP this year, 6 percent in 2011, but then hopes it to fall to the EU-mandated 3 percent level by 2013; then to 2 percent by 2014.

 France's debt is expected to climb to almost 88 percent of GDP in 2012, from 83 percent this year, and then start begin falling in 2013.

Dominique Barbet, an economist at Paris-based BNP Paribas, said the new budget will allow France to meet its deficit reduction targets.

"I think it is quite smart,” he said. “The government has taken a cautious approach in its estimate on fiscal income."

The government is also seeking to reduce its borrowing by limiting total spending at 286.4bn euros, or 714m euros higher than in 2010.

"This is a historic budget," said Budget Minister Francois Baroin. "A drop in the deficit by 1.7 percentage points in one year has not been seen in fifty years," he said.

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