France and Spain cut borrowing to alleviate debt.

Mr Ayrault pointed out that debt had grown by 30% of GDP in the past five years."This is a fighting budget to restore the country to health," he said."This is a fighting budget to fight a debt that doesn't stop rising and whose bill is being footed by the French and by future generations." The government promised to cut the debt to 3 % of GDP by next year. The deficit this year is expected to be 83.6bn euros, which is 4.5% of GDP. The eurozone limit is 3%.

Mr Ayrault confirmed a new 75% tax rate for people earning more than 1m euros (£800,000; $1.3m) a year. He said theat "With constant incomes, nine out of 10 French taxpayers will not be affected by the tax increases," French Prime Minister Jean-Marc Ayrault said, according to the AFP news agency.

However critics questioned how the government's promised increase in growth could be achieved and that taxing the rich a traditional socialist remedy merely encouraged wealth creators to move abroad. More austerity is inevitable and the government has said that  it can not now keep to its target of public finances coming outof the red by 2017. Unemployment has risen to over 3 million and private sector ouput has fallen to its lowest level in three and a half years. The French economy has suffered 3 years of zero growth.

On Thursday Spain unveiled an austerity budget comprising spending cuts, tax rises and structural reforms.

Spanish banks are likely to require another bail out of 60 billion euros in addition to  100 million euros provided by the EU. Spain is in an even tougher situation than France because of the ramifications and bad debts from its collapsed property sector which will never be repaid.

Regional governments are requesting bailouts from central government and the government of Catalonia has threatened to declare independence from central government.

Measures in the budget include a 12% average cut in ministerial spending,a freeze in public sector pay for the third consecutive year,a new independent authority to monitor government finances and  an increase in pensions funded by drawing on 3bn euros of reserves. As in France ,Spain is trying to spare pensioners and education. The  New York Times reported that many Spanish communities had  a sizeable number of people who were surviving by scavenging and hand outs from local supermarkets. Spain's population is suffering the same  poverty and unemployment as Greece withno end insight. A positive development is that the European Central Bank has overcome opposition and is buying Spanish debt and issuing bonds.