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Noyer Says Hollande Deficit Cuts Rely Too Much on Higher Taxes

November 09, 2012

Bank of France Governor Christian Noyer said President Francois Hollande’s deficit-reduction plan relies too much on tax increases and that they hurt economic growth more than spending reductions.

“I would prefer more savings from spending and less emphasis on revenue,” Noyer said in an interview with Le Progres newspaper that was published today. “Still, raising taxes reduces deficits more quickly. In future, the focus should be on spending.”

The comments by Noyer, a member of the European Central Bank board, are a rare criticism of the government by the politically independent central bank. Noyer said reaching Hollande’s target of a 2013 budget deficit of 3 percent of gross domestic product deficit is key to maintaining credibility in markets.

Hollande’s plan involves 20 billion euros ($26 billion) in tax increases and 10 billlion euros in spending cuts.

The central bank governor also said French banks are solid and don’t face the same fate as Spain’s, which required a 100 billion-euro European bailout.

To contact the reporters on this story: Helene Fouquet in Paris at

To contact the editor responsible for this story: James Hertling at

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