PARIS (AFP) - French Finance Minister Nicolas Sarkozy unveils his first and only budget on Wednesday, hoping to leave his mark by holding down spending and bringing France back inside EU deficit limits for the first time in four years.
The ambitious 49-year-old, who took over at finance in March, is expected to step down from the cabinet later this year to become head of the ruling Union for a Popular Movement (UMP) party -- a move widely seen as an opening move in his campaign for the French presidency in 2007.
Presentation of the 2005 budget marks the centre-piece of his brief tenancy, and Sarkozy is banking on strong public approval so that he can leave the government on a high note.
"I want to check all the documents, all the arguments, all the balance sheets right to the very end, because I am a perfectionist," Sarkozy said at the weekend. "I really want this budget to be a good one."
A firm believer in the need to restore order to French public finances, which have seen 30 years of accumulating deficits, the minister is expected to hold down overall government expenditure to the same level as 2004, plus a small margin for inflation.
With receipts boosted by an estimated 2.5 percent growth rate next year, this should allow Sarkozy to cut the annual deficit to 45 billion euros (55 billion dollars) and bring it under three percent of gross domestic product -- as required by the EU -- for the first time since 2001.
Faced by threats of legal action from Brussels for violating the Stability and Growth Pact that underpins the euro, President Jacques Chirac has promised to bring the budget deficit under the three percent limit by 2005 -- and Sarkozy can claim he has successfully fulfilled France`s pledge.
However some economists have warned that the growth prediction is optimistic, so France could once again be in breach.
With no major surprises expected, attention Wednesday was likely to focus on the allocation of ministerial budgets, adjustments to tax and social charges, and measures to promote domestic consumption -- with the left-wing Socialists accusing the government of unfairly favouring the affluent middle classes.
Commitments by Chirac to increase spending on defence, education and research have restricted Sarkozy`s hand, and cuts were seen as inevitable in other programmes.
"There are priorities which will get the money. But choices have to be made, and they have been made," Sarkozy said.
Among the measures reported to be in the budget are: a four percent increase in the "employment grant" given to people on low incomes, a tax credit for first time home-buyers to replace an existing zero-interest loan scheme and a reform of the television license fee.
Companies will see a small decrease in corporate tax, there will be incentives to invest savings in small-scale businesses and half a billion euros will be directed to combating "relocation" -- the export of jobs to cheaper countries abroad.
Two reported measures have been criticised by the left as presents for the government`s electorate: a reform of inheritance rules to double the amount that can be gifted to a child tax-free and an increase of 50 percent in the tax relief that can be claimed for employing domestic help.
"This budget is idiotically, grotesquely right-wing. It offers help only to the well-off," said Eric Besson, the Socialists` economic spokesman. "Let`s end this myth of Sarkozy being the friend of Mr Average. He is the friend of Mr Money."
Defending the reform of inheritance rules in a letter to Le Monde newspaper Tuesday, Sarkozy denied that it would only benefit the rich. According to the finance ministry, some 70 percent of the public approve the change, which would alleviate the tax load on legacies of as little as 60,000 euros.
The tax cut "stems from the need not to penalise initiative, not to discourage individual effort, and it responds to the concern of many French people that the fruit of their labour should be handed on to their heirs," he said.