The budget, presented to the Council of Ministers in Paris, forecasts a deficit of almost 42 billion euros.
President Nicolas Sarkozy's first budget includes
15 billion euros of tax cuts, some of which will be offset by a reduction in the number of civil servants next year.
Budget Minister Eric Woerth says the budget is an investment in the future of France.
It foresees the elimination of 23,000 state jobs - a measure that reportedly will save the country's coffers some 458 million euros in 2008.
Sarkozy underlines his determination to get a grip on France's troubled finances:
"Controlling public spending in France - I'm doing that and we will put it into force with Prime Minister Francois Fillon," he said.
But the head of the opposition Socialists, Francois Hollande, believes the planned budget is tougher than it appears.
"All of this is leading to an austerity plan which is not declared in the draft budget, but it is hidden," he said.
Defending his budget proposal, President Sarkozy insists France will have more growth, more jobs, more receipts and smaller deficits.
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