France projects 2004 growth of 1.7 pct

26th February 2004, Comments 0 comments

PARIS, Feb 26 (AFP) - French Prime Minister Jean-Pierre Raffarin said Thursday the economy would grow by the targeted 1.7 percent this year and that privatisations would enable France to respect eurozone spending limits in 2005.

PARIS, Feb 26 (AFP) - French Prime Minister Jean-Pierre Raffarin said Thursday the economy would grow by the targeted 1.7 percent this year and that privatisations would enable France to respect eurozone spending limits in 2005.

He also signalled that the French state would pull out of some big French companies in which it is a shareholder and that French groups in general should rely on European alliances rather than on government help to ward off hostile bids from outside Europe.

Raffarin told the association of economic journalists here that the government stood by its target for 1.7-percent growth, saying that growth might even turn out to be slightly higher in 2004.

He also said: "We are maintaining the target of a (public budget) deficit of less than 3.0 percent of gross domestic product in 2005. That requires budget discipline through control of spending."

To achieve this, France would also use money from privatisations and part privatisations and the sale of some state property.

France is in serious trouble with Brussels for running public deficits far above the permitted ceiling of 3.0 percent of output.

Raffarin also said there were reasons for the state to withdraw completely from several companies such as Alstom, Renault, France Telecom and Thales

Referring to recent financial problems for the state as a shareholder in France Telecom and the electricity distributor EDF, he commented: "It seems that we (the state) are not well suited to international operations."

The role of the state was not to be a player in the capitalist sphere.Raffarin was asked how the French state would react if foreign takeover bids were made for French companies, and notably by British Vodafone for Vivendi or British-Dutch Unilver for Danone.

The only way for European groups to strengthen themselves against the threat of takeover by foreign companies was to adopt a European vision, he replied.

The state had to watch over employment, but there were some areas into which it could not go without increasing public spending enormously.

It would be unreasonable for the state to get involved, he said.

The answer lay in "a European political and economic vision". He said that this analysis was shared by Britain and Germany.

A European approach was needed to face up to "international threats hanging over big European groups".

Referring to the recent acquisition of French aluminium and packaging group Pechiney by the Canadian group Alcan, he regretted that "Europe lacked vision at the time".

© AFP

                                                              Subject: France news

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