The French government yesterday (1 October) presented its draft 2015 budget, confirming that it would breach EU caps on public spending and setting itself up for a stand-off with the incoming European Commission.

The budget envisages a freeze on social security and regional spending and a cut of €2.5 billion in spending by the French state, representing around 0.7% of 2014 spending. The budget will raise taxes on diesel, though it also foresees an income-tax cut for low-earners.

Michel Sapin, France’s finance minister, said yesterday that the government was planning a deficit of 4.3% of gross domestic product in 2015, just a 10 basis-point reduction on France’s 2014 deficit. This means that France plans to comply with EU rules requiring member states to limit their deficits to 3% only in 2017. The European Commission has given France until 2015 to comply, on the back of two extensions.

The Commission has the power to fine countries that ignore EU budget rules. Spain’s draft budget, presented on Tuesday (30 September), foresees a budget deficit of 4.2% in 2015, down from a projected 5.6% in 2014. The government, which faces general elections next year, has until 2016 to meet the 3% limit.

The Spanish government plans to save some €13bn through spending freezes in 2015. The budget foresees the Spanish economy growing at 2% next year, calculating that this would drive up tax receipts and reduce costs relating to unemployment. Nicholas Hirst