France Unveils Tough Budget, Spain’s Rajoy Wins Time

Socialist President Francois Hollande’s 2013 budget amounts to France’s toughest belt-tightening for 30 years as the debt crisis takes its toll on the euro zone.

The package aims to narrow France’s deficit to 3.0 percent of national output next year from 4.5 percent this year, bringing in 30 billion euros ($39 billion) for the treasury.

But the budget dismayed business by opting for tax hikes — including a 75 percent tax on those earning over one million euros a year — by holding public spending and not cutting government jobs.

With Hollande facing record unemployment and economic stagnation, there were also fears the deficit target will slip as France falls short of the modest 0.8 percent economic growth rate on which it is banking for next year.