Economists hand Sarkozy master plan for French growth

24th January 2008, Comments 0 comments

French President Nicolas Sarkozy on Wednesday received a much-awaited economist's report on removing barriers to growth

   PARIS, January 23, 2008 - French President Nicolas Sarkozy on Wednesday
received a much-awaited economist's report on removing barriers to growth, but
its call for 300 free-market reforms sparked a mini-rebellion in his party.
   Chaired by the economist Jacques Attali, a former top advisor to former
socialist president Francois Mitterrand, the 43-member panel of international
experts was tasked by Sarkozy with exploring ways to "release" growth.
   Their report, entitled "300 proposals to change France," proposes a raft of
sweeping changes, from job market deregulation to local government reform,
boosting Internet access, investing in green technologies or opening up French
borders to immigration.
   Presenting his conclusions to Sarkozy and half a dozen key ministers at the
Elysee palace, Attali said the combined effect of the reforms could add a
percentage point to French economic growth by 2012.
   "We believe these measures need to be implemented quickly, and we believe
there is a limited window of opportunity to do so," Attali said.
   He said they would slash unemployment from 7.9 to five percent, create two
million new jobs and cut French debt from 66 to 55 percent of gross domestic
product -- as well as improve social mobility, ethnic diversity and even
increase the life expectancy of France's poorest citizens.
   Sarkozy told Attali he agreed with "the best part" of the commission's
findings, calling its work "remarkable," but stopped short of agreeing to
adopt the report wholesale as advocated by Attali.
   "By seeking to regulate everything in the smallest details, we have created
a straight-jacket that prevents growth, and the most vulnerable suffer the
worst from as a result."
   "I asked you to be bold... In a world that is changing at high speed,
France has fallen behind despite its exceptional assets... Our country needs
an intensive course of modernisation," he said.
   Sarkozy said the government would hold a seminar next month, in association
with lawmakers, to hammer out reform priorities and that several of the
report's measures would be worked into a draft bill on economic modernisation
to be debated in the spring.
   Among key measures to boost employment, Attali called for a cut on
employers' social charges -- among the highest in Europe, to be shifted in
part to the VAT sales tax -- and to allow people to stay in work past the age
of 65.
   But in parallel, it called for a major push on life-long training and
financial support for workers in between jobs.
   The French government has revised its growth forecast for 2008 to 2.0
percent, but private economists warn that is still too optimistic, predicting
as little as 1.4 to 1.6 percent expansion.
   As voters fret about the cost of living, sluggish growth and the knock-on
effect of the US economic slowdown, Sarkozy faces mounting pressure to deliver
on his election promise to kickstart the economy.
   But the president also vetoed a string of unpopular measures, fiercely
contested by members of his right-wing ruling UMP party who feared upsetting
their constituents just ahead of March municipal polls.
   Sarkozy ruled out a shake-up of the local pharmacy business, which had
reacted furiously to the suggestion, though he said he backed opening up other
areas including taxis to competition.
   He also ruled out a contested proposal to abolish France's 100 departments
as a tier of government, splitting their duties between larger regions and
grass-roots groups of towns and villages, saying the French people were
"attached" to the current system.
   And he vetoed two proposals that had sparked fierce protests from
environmentalists: for the creation of a series of new towns, and the removal
of a national safeguard clause restricting some types of research, including
in biotechnology.
   Sarkozy also steered entirely clear of the question of immigration, on
which the report called for an easing of rules to respond to labour shortage,
directly contradicting his party's policy of stricter controls.


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