Hol­lande re­buffs crit­ics, asks to be judged in 5 years on jobs

The Pak Banker - - Front Page -

PARIS

French Pres­i­dent Fran­cois Hol­lande, con­fronting a stalled econ­omy and slid­ing pop­u­lar­ity, re­jected calls for “shock” mea­sures and asked to be judged on growth and jobs at the end of his five-year man­date.

“The ques­tion that mat­ters in my eyes isn’t the state of opin­ion, it’s the state of France in five years,” Hol­lande said yes­ter­day in a 2 ½-hour press con­fer­ence in Paris, the first of such semi­an­nual gath­er­ings he has promised. “I want to be judged, when the time comes, on em­ploy­ment and growth.” With his pop­u­lar­ity slump­ing, the chal­lenge for Pres­i­dent Fran­cois Hol­lande is to use Gal­lois’s rec­om­men­da­tions to steer French unions and em­ploy­ers on to a path that will spur growth with­out gen­er­at­ing so­cial un­rest that has de­railed pre­vi­ous re­forms.

Six months af­ter gain­ing of­fice, the So­cial­ist pres­i­dent is strug­gling to re­tain sup­port from those who voted for him while con­vinc­ing crit­ics from Ber­lin to Wash­ing­ton that he’ll mod- ernize Europe’s sec­ond-largest econ­omy amid the re­gion’s three-year-old sov­er­eign debt cri­sis.

With un­em­ploy­ment at a 13-year high, a record trade deficit and at least three quar­ters with­out gross do­mes­tic prod­uct growth, a ma­jor­ity of French vot­ers are dis­sat­is­fied with Hol­lande’s per­for­mance as pres­i­dent, ac­cord­ing to an Ifop poll for Paris Match mag­a­zine pub­lished yes­ter­day.

At the same time, al­lies of Ger­man Chan­cel­lor An­gela Merkel have ex­pressed con­cern that Hol­lande isn’t mov­ing quickly enough to bol­ster French com­pet­i­tive­ness and the In­ter­na­tional Mone­tary Fund in Wash­ing­ton this month urged Hol­lande to em­bark on a “vig­or­ous” re­vamp of the econ­omy, say­ing its rigid la­bor rules and high costs are a “ma­jor chal­lenge” to eco­nomic sta­bil­ity.

France is Ger­many’s clos­est part­ner in Europe and it “would be good if the So­cial­ists there would coura­geously ini­ti­ate real struc­tural re­forms now,” Volker Kauder, head of the par­lia­men­tary group of Merkel’s Chris­tian Union bloc said, ac­cord­ing to a Spiegel mag­a­zine re­port.

Ger­many would like Hol­lande to “move a lit­tle more” to­ward Merkel, Spiegel quoted Kauder as say­ing.

Re­ports of Ger­man con­cern about Hol­lande’s poli­cies prompted Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble to warn yes­ter­day against call­ing France the “sick man” of Europe, say­ing the gov­ern­ments of the con­ti­nent’s two largest economies shouldn’t crit­i­cize each other. Hol­lande picked up that re­frain at his press con­fer­ence.

“We speak frankly with the chan­cel­lor,” he said. “We don’t give each other lessons, lessons in his­tory. It’s true we have to show we’re se­ri­ous on com­pet­i­tive­ness. Ger­many needs to show sol­i­dar­ity; it’s not easy for a coun­try that’s made so much ef­fort in the past decade.” Stick­ing to his elec­tion prom­ises, Hol­lande has cut the re­tire­ment age for some work­ers, im­posed a tax of 75 per­cent on earn­ings over 1 mil­lion eu­ros ($1.27 mil­lion) and lifted the min­i­mum wage. He has also pressed Merkel to ease her push for aus­ter­ity to fight Europe’s debt cri­sis. More re­cently, Hol­lande has set out a plan to give a tax credit to com­pa­nies to ease la­bor costs and raise France’s two high­est sales tax rates start­ing in Jan­uary 2014.

He has asked unions and busi­ness lead­ers to come up with a plan to make la­bor rules more flex­i­ble by the end of this year.

“I’ve been told by some we need a shock but economies don’t like shocks,” Hol­lande said. “What is needed is vis­i­bil­ity and sta­bil­ity, not im­pro­vi­sa­tion.”

Hol­lande said yes­ter­day that he in­tends to re­duce pub­lic spend­ing by 12 bil­lion eu­ros a year over his man­date, for a to­tal re­duc­tion of 60 bil­lion eu­ros by 2017. “Pub­lic spend­ing is now 57 per­cent of na­tional out­put,” Hol­lande said. “This may not mean much to the av­er­age French per­son. It was 52 per­cent five years ago. Are we liv­ing bet­ter for it? No. So we need to re­form the state.” So far, bond in­vestors haven’t shared Ger­man con­cern about France.

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