Macron to tackle welfare spending

PARIS - French President Emmanuel Macron's government will tackle social spending in the next wave of its reforms as weaker than expected growth puts pressure on the budget deficit, the prime minister said on Sunday.

Prime Minister Edouard Philippe said in an interview in Le Journal du Dimanche that the government would press on with its reform drive in the face of record unpopularity after little more than a year in office.

Macron has so far largely turned a deaf ear to criticism of his reforms, with detractors dubbing him the president of the rich after cuts to taxes on capital income during his first year in office, which he said encouraged investment.

His government has sold its pro-business reforms on promises that they will boost growth and jobs, but Philippe said that growth would be weaker than expected next year.

Philippe told Le Journal du Dimanche that the 2019 budget would be based on a growth forecast of 1.7 percent rather than the 1.9 percent forecast in April.

The prime minister acknowledged that the lower growth is likely to weigh on the public budget deficit, which is already under pressure from plans to make a payroll tax credit scheme permanent.

"But that does not prevent us from sticking to our commitments on reducing taxes while reining in public spending and debt," he added.

The slower growth outlook raises the chances that when the government produces its 2019 budget at the end of September it may need to change its public deficit target, previously pegged at 2.3 percent of economic output.

However, business daily Les Echos reported that the government could be aiming at a deficit close to 2.6 percent this year - the same as in 2017 - and as much as 3 percent next year.

"Sure, it's a higher than expected number, but choices had to be made," Les Echos quoted an unnamed government source as saying.

New push on defense

Meanwhile, Macron announced on Monday a new push for a European defense project, saying the continent's security shouldn't rely so much on the United States.

In a speech to French ambassadors in Paris, Macron said "Europe cannot rely on the United States only for its security. It's up to us to meet our responsibilities and guarantee our security, and therefore European sovereignty".

He said discussions on defense cooperation should be extended to all European countries and Russia.

Since his election in May 2017, the 40-year-old leader has called for a more integrated European Union, with a common European defense budget and security doctrine.

In November, EU countries officially launched a new era in defense cooperation with a program of joint military investment and project development aimed at helping the EU confront its security challenges.

Reuters - AP