France to bite the austerity bullet

French PM announces austerity measures and tax rises totalling $138bn in bid to eliminate budget deficit by 2016.

The French government has announced a package of austerity measures it says will save around $138bn (100 billion euros) as part of plans to eliminate the country's budget deficit by 2016.

Officials said the plan, announced on Monday, would save about $9.6bn in 2012, followed by savings of about $16bn in 2013 as France seeks to protect its AAA credit rating and avoid the financial market pressure engulfing other major eurozone economies such as Italy and Greece.

"The time has come to adjust France's efforts. With the president, we have only one goal: to protect the French people from the serious difficulties that many European countries are now facing," said Francois Fillon, the French prime minister.

"I believe that our citizens are now aware of the risks to our livelihoods and futures caused by deficits and debt. Bankruptcy is no longer an abstract term. Our financial, economic and social sovereignty require prolonged collective efforts and even some sacrifices."