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France unveils strict measures to fix budget

A person fills out a tax declaration for the 2012 income tax on September 10, 2012 in Lille, northern France.

The French government has just unveiled a budget for next year that includes major tax hikes for the rich and for businesses. France is the second largest economy in the euro zone and so far it has managed to remain a leader in the debt crisis, rather than a victim -- for the most part anyway.

The government has to fill a 30 billion euro gap in their budget -- including 10 billion euro worth of government cuts and 20 billion in tax raises. The budget also calls for a freeze on public spending.

How does this budget stack up to the other austerity measures that have been sprouting up around Europe? It depends who you are, according to the BBC's Christian Frasier. The tax cuts affect the super rich the most, with tax rates of 75 percent for people earning over 1 million euro.

But despite complaints from the wealthy and business leaders who worry about the impact the new budget will have on economic growth, the situation in France looks gloomy and needs a solution. Public debt is at a post-War high and unemployment is the highest level since France joined the euro.

"Although this budget isn't as big as other budgets we've seen in terms of austerity in other European countries," Frasier says, "it will have to go deeper and wider unless they can start to find some recovery."

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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