The measures revealed by Mr. Sarkozy’s prime minister, François Fillon, would come atop tax increases and spending cuts amounting to about $15.2 billion that were announced in August but have not yet gone into effect.
“Our country needs to roll up its sleeves,” Mr. Fillon said at a news conference announcing the new measures, which aim to achieve a total of $89 billion in savings by 2016.
Noting the depths of the debt crisis facing Greece, and the threat it now poses to Italy and Spain, the prime minister warned that “bankruptcy” for European governments was “no longer an abstract word.”
The new measures are a response to lower and more realistic estimates for economic growth and come as Mr. Sarkozy prepares for a difficult re-election campaign with a first round of voting next April.
The package of proposals presented Monday to Mr. Sarkozy’s Council of Ministers includes a plan to speed up raising the minimum retirement age to 62, from 60. The change would come in 2017, instead of 2018. In addition, taxes on France’s largest corporations — those with annual revenue exceeding about $345 million — will increase by 5 percent for the fiscal years 2012 and 2013, or until France’s public deficit returns to below 3 percent of gross domestic product.
France’s budget deficit currently is roughly 5.7 percent of G.D.P. The government has promised to shrink that figure to 4.5 percent in 2012, and to 3 percent by the end of 2013, with an eye to achieving a balanced budget by 2016.
The measures also include an increase in the value-added tax applied to things like restaurant meals, books and public transportation. The tax, currently 5.5 percent, will rise to 7 percent.
Mr. Fillon said the measures announced Monday would be incorporated into the plan announced Aug. 24, which had yet to be put in place. They are expected to take effect between now and year’s end, he said, without specifying whether enactment would take place via executive decree or after a parliamentary debate.
The president has vowed to do everything possible to avoid a downgrade of France’s top-notch credit rating, which would significantly increase the country’s cost of borrowing. Last month, Moody’s Investors Service warned that it could lower France’s rating by January if slowing growth and the costs of supporting French and European banks hurt by Europe’s debt crisis strained the budget.
Mr. Sarkozy’s main opponent, François Hollande, a Socialist, accused the president on Monday of assembling an incoherent patchwork of hasty measures that he argued would not have been necessary had the current government acted sooner to address France’s ballooning deficits.
“The government was caught off guard by the slowdown in growth,” Mr. Hollande said in an interview published in the left-leaning daily Libération, before details of the new austerity plan were formally announced. “Let’s not forget that since the beginning of Nicolas Sarkozy’s term, 75 billion euros in tax revenues were lost due to tax breaks given to large firms and wealthy households. It would have been legitimate to recoup some of these first, given that they have yielded no tangible benefit to the real economy.”
Mr. Hollande has called for tightening existing tax breaks for corporations and wealthy individuals, as well as scrapping a plan championed by Mr. Sarkozy to lower the country’s wealth tax and exempting overtime work from social security taxes.
The government now expects the French economy to grow by only about 1 percent in 2012 — down from a previous forecast of 1.75 percent — so it had to adjust its budget to meet the deficit targets and reassure the financial markets. But some private economists cautioned that even the revised growth outlook might be too optimistic.
“Today we have no growth; we are on the brink of a recession,” Marc Touati, an economist at Assya, a French brokerage firm, told LCI Television. “‘We are not even sure to reach 1 percent growth next year.”
Mr. Fillon, the prime minister, told a news conference on Monday: “We have only one goal: to protect the French people from the serious difficulties that many European countries are now facing. Our citizens are now aware of the risks to our livelihoods and futures caused by deficits and debt.”
France’s new budget plan also calls for a freeze in the salaries paid to all members of Mr. Sarkozy’s government, as well as that of the president, until the country has achieved a balanced budget. Mr. Fillon called on the top executives of the CAC-40 index of the largest French companies to do the same.
Shortly after Mr. Sarkozy took office in 2007, the Élysée Palace authorized a 140 percent increase in the salary for the office of the French president, to about $330,000 per year, bringing it in line with that of the prime minister. The other members of the French cabinet earn just about $220,000 annually.
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