Debt crisis: Francois Hollande to be tested as he unveils France's toughest Budget for 30 years Mr Hollande, who has said the Budget will be "the most important fiscal effort in 30 years," is expected to unleash €30bn (£23.9bn) of austerity cuts and tax hikes needed to cut France's deficit to 3pc of GDP by next year. Bond traders on Thursday were poised to dump French debt if Mr Hollande reneges on his promise. The handling of Europe's second biggest economy, which is on the verge of recession and a public debt of almost 90pc of GDP, is being carefully watched around the world. The President is also under intense pressure at home to slow the pace of austerity for the sake of the fragile economy. Earlier this week, French unemployment rose by about 3m for the first time in 13 years. Economist Nicholas Spiro said: "It's the first big test of investor sentiment towards France since Mr Hollande became president in May. For the past four months, the bond markets have given the new Socialist government a free pass. The idiosyncrasies of France's debt market - deep, liquid and relatively safe enough to act as a "second-best" alternative to even richer German paper - have trumped concerns about the country's deteriorating economy. The question is whether doubts about the credibility of French fiscal and economic policy in the coming weeks and months will be the trigger for a reassessment of France. Adding to the pressure, the French statistics agency, INSEE, is due to publish the country's revised second-quarter GDP figure on Friday, too. After a raft of gloomy PMI data recently, experts are pessimistic. Analysts at BNP Paribas said in a note: "We have identified a risk for a downward revision from unchanged to -0.1pc. This is not a major revision, but it would be the first contraction since [the first quarter] 2009... In this context, any sign that Q3 and/or Q4 GDP would contract sounds like a full-blown recession. Mr Hollande is expected to say his tough measures are necessary to aid the recovery. His Socialist party is hoping that Mr Hollande's pledge to impose a 75pc rate of income tax on anyone earning more than €1m a year will offset the unpopular cuts. However, French businessmen have warned that the tax will damage the country's competitiveness and lead to entrepreneurs fleeing abroad. Jean-Paul Agon, chief executive of L'Oreal, told reporters this week: "If there is such a new tax rule, it's going to be very, very difficult to attract talent to work in France, almost impossible; at a certain level, of course." Bernard Arnault, head of the luxury goods group Louis Vuitton Moet Hennessy, admitted he had applied for Belgian citizenship, though he insisted it was not to avoid French taxes.