France has laid down the gauntlet to EU partners with its 2015 ''no austerity'' budget. As David Pollard reports, it blames the fragile economy for taking two years longer than planned to bring its borrowing back to within EU limits.
Paris à la mode as Chanel celebrates fashion week with a mock-up of a hallowed French institution, the street demonstration. Those who wanted the real thing only had to journey across town. These pharmacists were protesting against moves to deregulate their industry. They say consumers will suffer through a drop in standards. Critics say it's just another instance of the road-blocks facing reform in a France which - according to its finance minister - rejects austerity. Michel Sapin was presenting his 2015 budget plan. SOUNDBITE (French) FRENCH FINANCE MINISTER MICHEL SAPIN: "Our economic policy is not changing, but the deficit will be reduced more slowly than planned due to economic circumstances - very weak growth and very weak inflation .... We take responsibility for the seriousness of the budgetary situation, we reject austerity. The consequence is that the deficit will fall from 4.4 percent in 2014 to 4.3 percent in 2015, and will come back under the three percent in 2017." Previously, France had pledged to bring its deficit below three percent by next year. That deadline already extended from 2013. Sapin says he's sticking to cuts to public spending - 50 billion euros worth over the next three years. But along with the pharmacists, there are other worries. Latest data shows factory activity still shrinking in September - although at a slower rate. And consumer spending largely stagnant over the summer months. An even bigger concern may be the reaction of neighbours to its budget. And what it means for the ECB. Alastair McCaig is a Market Analyst at IG. SOUNDBITE (English) ALASTAIR MCCAIG, MARKET ANALYST, IG: ''It's a very difficult situation. The political security that Francois Hollande has is unstable at best, the fact that he's had to get a new government in behind him to really help push through even these measures shows how delicately balanced his power base is, but I just don't think Germany will too impressed and it does beg the question as to how keen they'll be with the idea of pushing forward any sort of quantitative easing down the road without the necessary austerity measures in place prior to that.'' France argues further austerity could snuff out a fragile euro zone recovery. It's thought to count Italy, Greece, Ireland and Spain as allies in that debate. But its public spending and tax burden are still among the highest in the world. For its detractors, France's economy is certainly not back in fashion.