Europe, Deficit | featured news

The new tax is expected to be formally announced in the government's first budget on 28 September, but that does not mean there is a sense of panic in France. This new tax will only hit very rich individuals and only for a year or two, to help bring down the government deficit.

French President Francois Hollande has set himself a deadline to turn around the economy by the end of 2014, but having hamstrung the effort with tax rises to meet deficit targets, economists doubt his growth goals will ever fly.

Spain's new government said on Friday the public deficit for 2011 would come in at 8 percent of gross domestic product, well above a target of 6 percent, and announced income and property tax hikes and a civil servant wage freeze in response.