French government will take a hit of 2 billion euros by suspending fuel tax hike

The suspension of planned fuel tax increases for six-months, announced by the French government to appease so-called "yellow vest" protesters, will cost 2 billion euros ($2.3 billion), a government source told Reuters on Tuesday.

This hole in public finances will be funded entirely by corresponding spending cuts so that the French budget deficit does not veer from its planned target of 2.8 per cent in 2019, the source added.

France's prime minister suspended planned increases to fuel taxes for six months in response to weeks of sometimes violent protests, in the first major U-turn by President Emmanuel Macron's administration after 18 months in office.

(With inputs from agencies.)