The French government today presented a budget that was heavy on taxes - including a controversial 75% income rate on high earners.

But critics said it lacked fundamental reforms that could jumpstart growth.

President Francois Hollande's cabinet defended the spending plan for next year, calling it a "fighting budget" that would win the "battle" against joblessness and help growth.

France must tread a fine line between cutting the debts that dragged them into the financial crisis and investing in the economy to spur growth.

The French economy, the second largest among the 17 countries that use the euro, has not grown for three quarters in a row, the national statistics agency confirmed today. Unemployment has been on the rise for more than a year and stands at 10.2%.

Economists warn, however, that things could get much worse in France if it does not get serious about slashing state spending and reforming stringent labour laws.

"This is a serious budget, it's a leftist budget and it's fighting budget," Finance Minister Pierre Moscovici told French radio this morning.

Because Hollande promised that he would slash the country's deficit to 3% next year - a limit required by European rules - the government must find €30 billion in savings. One-third will come in spending cuts, with the rest in new or higher taxes on the wealthy and big companies, including a 75% tax on incomes over €1m.

Among the other measures included are: a new income tax level at 45% for those making more than 150,000, an increase of capital gains taxes to bring them more in line with how salaries are taxed, and a cap on certain deductions for large companies on their income taxes.

The 75% tax will last for two years and has always been billed as a symbolic measure since it will bring in very little revenue.

Several businessmen and politicians in the opposition have said that is exactly what is wrong with the 2013 budget: It sends the message that France doesn't like the rich and is not open for business.

But Prime Minister Jean-Marc Ayrault has insisted that the budget would win the battle against unemployment. "It's a budget that aims to inspire confidence and to break the debt spiral that keeps growing and growing," he said after the budget was presented to the Cabinet.

The budget is built around an expectation of 0.8% growth for next year. If growth misses the projections, more cuts could be needed later. Moscovici conceded that most economists predict the French economy will grow just 0.5%, but said that if the European debt crisis stabilises, France would meet its targets.