Strauss-Kahn: hefty tax-rise for business

French Tax Rise to Qualify for Single Currency

An audit of state finances has confirmed that France's budget deficit this year is running at around 3.6 percent of GDP, well above the 3 percent target required for joining the single currency.

Mr Strauss-Kahn blamed the previous right-wing administration for this state of affairs, and announced a temporary but hefty tax increase of 15 percent for big companies.

He said that the tax rise - together with cuts in public spending including a reduction in the defence budget - would almost fill the hole in the budget, and would ensure France was as ready for monetary union as her partners would be.

Mr Strauss-Kahn chose his words with care and suggested that while France may miss the all-important 3 percent target, it would not be alone. But he said that this should not prevent the launch of the Euro.

The measures were welcomed by the German Finance Minister, Theo Waigel, who was informed of the French measures beforehand.

The French government insists that it is keeping to its election promise not to continue with austerity measures because its package won't hit ordinary taxpayers. It hopes that its action will be enough to persuade its partners that France is serious about joining the single currency.